SEBI has passed an ex parte ad interim order against certain individuals and their relatives (Noticees) employed at the Multi Commodity Exchange of India Limited (MCX) and Financial Technologies (India) Limited (FTIL), a company promoted by MCX, for trading in the scrip of MCX, in violation of the provisions of SEBI (Prohibition of Insider Trading) Regulations, 1992.
On April 27, 2012, a show cause notice (SCN) was issued by the Department of Consumer Affairs (DCA) to the National Spot Exchange Limited (NSEL), a company closely held by FTIL. Under the SCN, the DCA had alleged that NSEL was not eligible to avail an exemption from application of Forward Contracts (Regulation) Act, 1952 and NSEL had acted in violation of it. This information remained unpublished till the time NSEL issued a circular suspending trading in all contracts (except e-series) and deferring settlement of the pending contracts on July 31, 2013.
An investigation was initiated by SEBI wherein it determined that the issue of SCN was price sensitive information for MCX, as NSEL was indirectly held by MCX. SEBI observed that by virtue of their position in NSEL, FTIL and MCX, it was reasonably expected that the Noticees possessed the said UPS I and the trades undertaken by them in the scrip of MCX was on the basis of the said UPSI, thereby committing Insider Trading.
SEBI calculated the amount of loss averted by the Noticees by trading during the period when UPSI existed and passed a direction impounding the amount of losses averted by Noticees and directed them to file their reply within 21 days of the order.