Poonawalla Fincorp Managing Director Abhay Bhutada resigned from the company with immediate effect, the company told the stock exchanges on Thursday. The announcement regarding Bhutada's resignation came just a day after he, along with seven others, were barred from the securities markets by SEBI for alleged "insider trading".
Poonawalla Fincorp said its board has accepted Abhay Bhutada's resignation, and now he ceases to be a director and key managerial personnel in the company. It said the trading window under the company's "Code of Conduct For Prohibition of Insider Trading' will remain closed for dealing in securities of the company for the "designated persons and their immediate relatives" with immediate effect from 16 September 2021 to 18 September 2021 (both days inclusive).
A few months back, Kolkata-based Magma Fincorp was renamed Poonawalla Fincorp after it was acquired by the Poonawalla Group. A SEBI order on Wednesday barred Bhutada and seven other entities from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders.
The market regulator also impounded their bank accounts to the extent of their respective liability worth over Rs 13 crore. "The banks where entities are holding bank accounts, jointly or severally, are directed to ensure that till further directions, except for compliance of direction at sub-paragraph (c) and (d) above, no debits shall be made in the bank accounts of the Entities without the permission of SEBI," the order said.
SEBI's system had generated "insider trading" alerts related to the company's shares in February 2021. It was around the same time when the corporate announcement was made regarding acquisition of a controlling stake in the company by Rising Sun Holding Private Limited, controlled by Poonawalla Group. For the said purpose, Magma had made a preferential allotment to RSHPL to raise fresh capital of Rs 3,456 crore.
A preliminary examination, conducted by SEBI to check whether there were insider trading activities in the counter, showed there were phone calls amongst the entities during the relevant period and the said phone calls were followed by transfer of funds. "It is also noticed that persons enjoying connection through phone calls, fund transfers, etc, have traded in the scrip of Magma in advance of the afore-mentioned event i.e. disclosure of the corporate announcement," the SEBI order said.
In his defence, Bhutada, in his letter to the board members, denied all the allegations mentioned against him in the SEBI order. "I have not shared any unpublished price sensitive information (UPSI) directly or indirectly to the entities mentioned in the order except the official discussion with entity no 2 who was working as an advisor for the acquisition transaction," he added.
He said he has not received any kind of financial benefit directly or indirectly from the entities mentioned in the order. "My transactions with the entities mentioned in the order are genuine business transaction and legitimate in nature including few of the past transaction," he said, adding that he'll take appropriate legal recourse.
Meanwhile, the Poonawalla Fincorp share closed at Rs 172.15, down 5 per cent, from the previous session close on the BSE.
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