Insider-trading in Satyam Computer

Insider-trading: SEBI imposes Rs 65 lakh penalty on Satyam Computer staff

MUMBAI, DEC 21: 

Stock Market regulator SEBI has fined T.A.N. Murti, Rs 65 lakh for insider trading, in the Satyam Computer Services (SCS) scrip in December 2008.SEBI found that Murti, the then Head — Investor Relations of SCS had sold a major chunk of his holdings (14,500 shares of SCS) on December 15, 2008. His holding reduced to 3,000 shares, post the sale.

SCS had announced a proposal to acquire Maytas Infra and Maytas Properties on December 16, 2008, and cancelled the proposal on December 17.On December 17, the SCS scrip lost 33.5 per cent to record a low of Rs 151 a share before recovering to close at Rs 157.1 a share.SEBI also observed that certain employees and clients sold SCS shares between November 25 and December 16, 2008 till before the announcement.In addition, some 80 clients sold shares before January 7, 2009, when B. Ramalinga Raju, the then SCS Chairman, confessed to artificially inflating the company financials.The trading window (for insiders) was closed from December 17, 2008, and stayed closed till June 12, 2009.

‘ONLY DRAFT PROPOSAL’

Murti contended that he only received a draft proposal of merger from Srinivasu Satti the then Head — Mergers and Acquisitions SCS on December 14, 2008 without the names of the companies.However, SEBI found that Murti received another mail from Satti titled Maytas Properties which contained the financial statement of a company with code B2 on the same day.SEBI observed that if Maytas Properties was B2, it could be reasonably presumed that B1 was Maytas Infra.

MOBILE RECORDS Further mobile records revealed that Murti and Satti spoke to each other twice — once on December 14 (12:36:05 hours) and again at 19:27 hours on December 15, 2008 and the conversation lasted for nine minutes. Murti sold 14,500 shares at an average price of Rs 226 per share on December 15, a day before the news of acquisition of the two Maytas companies became public. SEBI found that Murti avoided a loss of Rs 21.54 lakh by selling on December 15, 2008. Had he sold those shares on June 15, 2009, after the opening of the trading window, he would have realised only Rs 77.40 per share. SEBI ruled that Murti was indeed an insider and finding him guilty of insider trading, the regulator fined him Rs 65 lakh.

raghavendrarao.k@thehindu.co.in

http://www.thehindubusinessline.com/markets/insidertrading-sebi-imposes-rs-65-lakh-penalty-on-satyam-computer-staff/article4226171.ece

M&M Target achieved, November 5, 2012 8:16 PM

M&M Target achieved, November 5, 2012 8:16 PM

Citigroup fined $2 million over facebook IPO

New York: The top securities regulator in Massachusetts has fined Citigroup $2 million, charging that an analyst there leaked confidential information about Facebook's initial public offering.

Secretary of the Commonwealth William Galvin announced the charges Friday. Citi agreed to the settlement without admitting or denying wrongdoing.

Citi was part of the team of banks that helped underwrite the deal that made Facebook a public company in May. When a bank helps underwrite such a deal, it has information about a company that the broader investing public does not have. The bankers who underwrite the deal are not supposed to act on that information or share it with any favored clients, because it would give them an unfair advantage over the public.

The arrangements can also bring accusations of conflicts of interest; banks not only help companies go public or do other deals, they also have units that provide research on the companies. The research is supposed to be impartial, but the banks have a stake in how a company does if it is helping it with underwriting.

According to Galvin's office, a junior analyst in Citigroup's San Francisco office was assigned to help research Facebook. On May 2, the junior analyst sent an email to two employees at the technology website TechCrunch.com, with proprietary information about Citigroup's research on Facebook.

"I am ramping up coverage on FB and thought you guys might like to see how the street is thinking about it (and our estimates)," the junior analyst wrote.

A TechCrunch employee wrote back: "There's no way I can publish this doc from an anonymous source, right?"

A minute later, the junior analyst replied: "My boss would eat me alive."

The analyst and the TechCrunch employee were friends, according to Galvin's office, and had gone to Stanford together.

Citigroup fired the junior analyst in September. The bank told Galvin's office that the junior analyst acted alone. In addition to agreeing to the $2 million fine, Citi also agreed to review its policies for overseeing analysts' communications, and to strengthen compliance training for the analysts.
http://profit.ndtv.com/news/international-business/article-citigroup-fined-2-million-over-facebook-ipo-312538?pfrom=home-latest