Ace investor and billionaire Rakesh Jhunjhunwala has been summoned by the Securities and Exchange Board of India (SEBI) in a case of insider trading of training company Aptech, a company owned by Jhunjhunwala's family where he also is the Chairman.
Jhunjhunwala holds 24.2% stake in Aptech. In 2005, he first picked up10% in 2005, and raised his stake in the company over the years. Currently, his shareholding in the company is valued at Rs 160 crore.
Livemint quotes a person with direct knowledge of the matter as saying that SEBI suspects irregular trades were done between the timeframe of February 2016 to September 2016 using insider information about the company.
Insider trading is the practice of using insider, non-public information about a company that is significant to trade shares of the company on the stock market. Trading using information that isn’t public yet is illegal.
SEBI also reportedly called in other family members for questioning. According to an Economic Times report, Jhunjhunwala’s wife Rekha, brother Rajeshkumar and mother-in-law Sushiladevi Gupta were called for questioning by SEBI on January 24 along with him.
SEBI is also investigating the role of some board members including investor Ramesh S Damani and Director Madhu Jayakumar.
The summons have been issued under Section 11 C(5) of the SEBI Act. This gives the markets regulator power to summon individuals for any probe.
Rakesh Jhunjhunwala is a sought-after investor who manages his own portfolio in Rare Enterprises, an asset management company. Aptech is the reportedly the only company in his portfolio in which he has management control. One of the richest investors in the country, he reportedly holds shares worth nearly Rs 11,140 crore (as per Bloomberg estimates).
He also holds a share in companies such as Crisil, Titan, Federal Bank, Lupin, Edelweiss Financial Services, among others.
The ET report states that this isnt the first time he has been questioned by SEBI. In 2018, he came under the SEBI scanner for suspected insider trading in Geometric.
“Jhunjhunwala later settled the case through consent by paying Rs 2.48 lakh. Consent is a mechanism through which alleged violations can be settled by paying a fee to SEBI without admission or denial of guilt,” the report states.