SEBI Imposes Penalty on Rashmi Saluja Over UPSI-Based Share Sales

The Securities and Exchange Board of India (SEBI) on 13 May passed a final order against former Religare Enterprises Executive Chairperson Dr. Rashmi Saluja in an insider trading matter linked to the Burman Group’s open offer for Religare Enterprises Ltd. SEBI Whole Time Member Kamlesh Chandra Varshney directed Saluja to disgorge and pay back alleged wrongful gains of Rs. 1.99 crore along with interest and also imposed a monetary penalty of Rs.40 lakh for violation of insider trading regulations.

“The allegations stand proven based on a preponderance of probabilities, as established by the evidence on record.”

According to SEBI, the unpublished price sensitive information (UPSI) was related to the Burman Group’s proposed open offer to acquire a 26% stake in Religare Enterprises at Rs. 235 per share. The Board observed that the UPSI period began on September 8, 2023 and continued till the public announcement before market opening on September 25, 2023.

SEBI alleged that Rashmi Saluja sold approximately 12.93 lakh shares of Religare Enterprises on September 21 and 22, 2023 due to the price sensitive information. The regulator relied upon WhatsApp messages, call data records, sworn statements and meeting details to conclude that Saluja was aware of the proposed acquisition plans of the Burman Group.

The order also referred to multiple exchanges between Saluja, Dr. Anand C. Burman and Arjun Lamba, including meetings. SEBI further noted that communications exchanged after the open offer announcement demonstrated Saluja’s knowledge of the transaction and ongoing developments relating to the acquisition plan. SEBI pointed out that, “Insider trading prohibitions apply irrespective of internal approvals if a person is in possession of UPSI.”.

Rejecting the defence that the share sales were pre-cleared by Religare’s compliance officer and were undertaken for funding ESOP exercises in Care Health Insurance Ltd., SEBI held that the trades were carried out due to the unpublished price sensitive information being available to them. The regulator calculated the alleged wrongful gain in the nature of “loss avoided” at Rs.1.99 crore by comparing the weighted average sale price with the market price after disclosure of the open offer.

In view thereof, SEBI directed Saluja to disgorge the alleged gains along with 12% annual interest within 45 days and deposit the amount in the Investor Protection and Education Fund. A separate monetary penalty of Rs.40 lakh was also imposed under the SEBI (Prohibition of Insider Trading) Regulations, 2015.

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