SEBI Lifts Securities Market Ban on Entities in Lux Industries Insider Trading Case

On November 6, the Securities and Exchange Board of India (SEBI) revoked the securities market ban that had been imposed on 14 entities in the Lux Industries Ltd insider trading case. The regulatory body stated that the charges against these entities could not be sustained.

Among the 14 entities was Udit Todi, the son of Lux Industries’ managing director, who currently holds the position of executive director in the company. SEBI had initially issued an interim order in January 2022, barring these entities from engaging in insider trading and ordered the impounding of ill-gotten gains amounting to Rs 2.94 crore in the case. These directions were later confirmed by SEBI in May 2022.

After the conclusion of the investigation, SEBI determined that the restraining direction issued against these entities need not be continued. Additionally, the impounded sum of Rs 2.94 crore, along with interest, will be released.

SEBI’s decision to revoke the securities market ban was based on the inability to establish the flow of communication of Unpublished Price Sensitive Information (UPSI) due to a lack of evidence. Specifically, SEBI noted that except for one call made by Udit Todi to Mohd. Mujtaba Khan during the UPSI period, no other material evidence was found to establish the communication of UPSI, directly or indirectly, from Udit Todi to other entities involved in the case.

Furthermore, SEBI observed that the trading done by Sanjeev Bubna through entities such as Indi Stock Pvt Ltd was not based on UPSI. As a result, the regulatory body decided to revoke the directions issued against the entities with immediate effect.

In its interim order, SEBI had suggested that Udit Todi had passed on UPSI to his connected entities, which subsequently led to the transmission of this sensitive information to other individuals and related entities.

The securities market ban has now been lifted in light of the lack of evidence to sustain the charges, bringing an end to this insider trading case involving Lux Industries.

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