Sebi bars Abhijit Pawar over insider trading allegations

Sebi, Abhijit Pawar, insider trading, stock, trading rules, trades e

Mumbai: India’s capital-markets regulator has barred Abhijit Pawar, nephew of Nationalist Congress Party chief Sharad Pawar, from dealing in securities for an alleged breach of insider-trading rules involving the stock of the erstwhile Magma Fincorp.

The Securities and Exchange Board of India (Sebi), in its interim order passed on September 15, has also impounded the bank accounts of Abhijit Pawar, MD of the Sakal Media Group. Pawar, meanwhile, told ET that his lawyers would “appropriately respond” to the regulator.

The trading ban is applicable until further directives from Sebi.

The regulator alleged that Pawar had funded the trades executed by one Rakesh Rajendra Bhojgadhiya and his Hindu Undivided Family (HUF) in the shares of Magma Fincorp, now known as Poonawalla Fincorp after a takeover.

Examining transaction data from bank statements, Sebi alleged that Pawar and his wife transferred ₹15 crore to Bhojgadhiya and his HUF. These funds were reportedly utilised to trade in the shares of Magma Fincorp during the unpublished price-sensitive information (UPSI) period.

Profits amounting to ₹8.32 crore were allegedly made by Bhojgadhiya. The profits were allegedly later transferred to Pawar and his family members.

“From the records available before me, I can further observe that subsequent to the sale of shares of Magma purchased by entity nos. 6 (Rakesh Rajendra Bhojgadhiya) and 7 (Rakesh Rajendra Bhojgadhiya HUF) during the UPSI period, the sale proceeds and the profits so generated from the sale were transferred…back to the accounts of entity no 8 (Abhijit Pawar) and his family members’ accounts from where the funds were originally received,” Sebi whole-time member S K Mohanty said in his order.

Abhijit Pawar, in response to mailed queries from ET, said he was “confident” of a favourable outcome after his legal deposition before the regulator.

“I have sought legal advice and my lawyers will appropriately respond to the actions taken by Sebi,” Pawar told ET. “I am confident that once Sebi receives our response, it will drop the proceedings.”

Sebi, meanwhile, alleged that Abhijit Pawar was in constant touch over the phone with Abhay Bhutada, former managing director of Poonawalla Fincorp, during the UPSI period. Bhutada recently quit after the Sebi probe began. “The fact that entity nos. 1 (Abhay Bhutada) and 8 (Abhijit Pawar) were communicating with each other even before the UPSI period indicates that the two entities shared a strong connection between them. I also note that there has been an increase in the number of calls and… durations of such phone calls…during the UPSI period,” Sebi said.

The Sebi order also referred to frequent conversations between Bhutada and Pawar during the UPSI period.

Sebi’s probe revealed that Bhutada had allegedly passed on inside information to his connected entities – Pawar, Saumil Shah and Rakesh Bhojgadhiya, who in turn passed on this information to Amit Agrawal. Following the Sebi order, Bhutada resigned from the board of Poonawalla Fincorp with immediate effect.

Poonawalla Fincorp is conducting an independent investigation into the allegation against Bhutada, its chairman Adar Poonawalla has said.

Meanwhile, KPMG India has ‘separated’ its partner Saumil Shah after he was named by Sebi. Shah was KPMG’s M&A tax partner and was an adviser to the Poonawalla-Magma Fincorp deal when he was with the Economic Laws Practice. According to the people in the know, KPMG had asked the partner to put in his papers following the allegations.

“The firm takes independence and non-compliance with firm’s policies and regulations extremely seriously. The individual concerned was not a partner in KPMG during the period that he undertook these transactions in the month February, 2021, and the firm had no knowledge of these violations until the Sebi report was published,” A KPMG India spokesperson said, responding to ET’s query. “He joined the firm in May, 2021, and has been separated from the firm since the incident came to our knowledge. The firm remains committed to ensuring full compliance with all applicable laws and regulations,” the spokesperson said.

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