Sebi lifts ban against entities in Lux Industries insider trading case

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Sebi on Monday revoked the securities market ban imposed on 14 entities in the matter of alleged insider trading in Lux Industries Ltd saying the charges levelled against them could not be sustained.


The 14 entities include Udit Todi, the son of the managing director of Lux, who is currently holding the post of executive director in the company, according to Sebi’s order.


The regulator, through its interim order passed in January 2022, barred 14 entities from indulging in insider trading and ordered impounding ill-gotten gains of Rs 2.94 crore in the matter. Later, the directions were confirmed by Sebi in May 2022.


After the conclusion of the investigation into the matter, Sebi said that a restraining direction issued against these entities through an interim order and a confirmatory need not be continued.


Also, it said that Rs 2.94 crore impounded in the matter will be released, along with the interest.

Revoking the securities market ban, Sebi observed that the “flow of communication of UPSI could not be established on account of lack of evidence. In the absence of cogent evidence available on record to show as to how the UPSI was communicated, the charges levelled cannot be sustained.”

With regard to the communication of UPSI from Udit Todi to Mohd. Mujtaba Khan, Sebi observed that Udit Todi had made one call to Khan during the Unpublished Price Sensitive Information (UPSI) period (on May 14, 2021).


Except for the said one call, no other material was found during the investigation, that could establish the communication of UPSI, directly or indirectly, from Udit Todi to Mohd. Mujtaba Khan, and from Khan to any of the remaining entities — Evermore Stock Brokers Pvt Ltd, Akshay Kapoor, Dinero Finance and Investments Pvt Ltd, Anju Somani, S S Corporate Securities Ltd, Sunder Somani, Suyash Somani, Arun Kapoor and Shubham Somani.


Also, Sebi noted that the trading done by Sanjeev Bubna through entities like Indi Stock Pvt Ltd and others was not based on the UPSI.


“The directions issued vide the interim order dated January 24, 2022, which were confirmed with modifications vide order dated May 27, 2022, against the entities, are revoked with immediate effect,” the Securities and Exchange Board of India (Sebi) said.


In its interim order, Sebi noted that Udit Todi had prima facie passed on the UPSI to his connected entities, Avani Todi, Bubna, and Khan.


Through Khan, the UPSI was further passed on to Akshay Kapoor, who in turn passed on the information to Shubham Somani. Moreover, Shubham Somani further passed the UPSI to other members of the Somani family and other related entities, Sebi had stated.

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