Marcellus’s Saurabh Mukherjea settles insider information violation case with SEBI by paying Rs 1.37 cr

Regulator had alleged that Mukherjea did not maintain the confidentiality of price sensitive information about Manappuram Finance

Kumar Shankar Roy Oct 30, 2020

SEBI watchdogNoted market voice and portfolio manager Saurabh Mukherjea has settled the violation of price sensitive insider information norms related to Manappuram Finance stock with SEBI by paying up Rs 1.37 crore.

In a disclosure put up on the regulator’s website, it was said that the Securities and Exchange Board of India (SEBI) had initiated adjudication proceedings to inquire into and adjudge the alleged violation by Saurabh Mukherjea in the matter of investigation in the scrip of Manappuram Finance Limited (MFL).

A show cause notice dated May 29, 2019, was issued and served on Mukherjea, stating that Manappuram had shared information regarding probable negative profit for the 4th quarter of FY2012-13.

Mukherjea, then employed by Ambit Capital, in a meeting dated March 18, 2013 with Manappuram company representatives had procured unpublished price sensitive information and then communicated the said price sensitive information through a research report about 2 months ahead of the company’s public disclosure of earnings. This was in violation of SEBI norms.

When the loss information was disclosed to the public, the price of the Manappuram scrip declined by 14.25% on March 20, 2013.

Manappuram eventually announced its financial results for the quarter ended March 31, 2013 on May 15, 2013 after market close. On May 16, 2013 the price of the Manappuram scrip on the BSE fell by 6.25%.

“Mr. Saurabh Mukherjea has not maintained the confidentiality of the price sensitive information and has thereby violated Regulation….Further, the act of commission of releasing research report prior to making the information public resulted in fraud on innocent investors, who were not privy to the said price sensitive information and dealt in the scrip of MFL during 19th and 20th of March 2013 was in violation…,” SEBI said.

Pending adjudication proceedings, Mukherjea submitted an application for settlement dated July 23, 2019 and an undertaking. This was done by him without admitting or denying the findings of fact and conclusions of law.

Pursuant to the said settlement application, the authorised representatives of Mukherjea attended a meeting with the Internal Committee (IC) on March 11, 2020, July 22, 2020 and August 5, 2020.

The settlement terms as proposed by Mukherjea was placed before the High Powered Advisory Committee (HPAC) in its meeting held on September 22, 2020. After considering the facts and circumstances of the case, the HPAC recommended that the case may be settled on payment of Rs
1,37,70,000/- (Rupees One Crore Thirty-Seven Lac Seventy Thousand only) towards settlement charges which were approved by the panel of the Whole Time Members, SEBI on September 25, 2020.

Since then, Mukherjea has remitted the sum of Rs. 1,37,70,000/- (Rupees One Crore Thirty-Seven Lac Seventy Thousand only) through RTGS towards the terms of settlement in the matter.

“In view of the above, in terms of Regulation 15(1) of Settlement Regulations, it is hereby ordered that this settlement order disposes of the adjudication proceedings initiated against the Applicant vide the Show Cause Notice SEBI/HO/EAD-3/JS/DJ/OW/P/13577/1/2019 dated May 29, 2019,” SEBI added.

Mukherjea quit Ambit in June 2018. He is now the Founder and Chief Investment Officer of Marcellus Investment Managers, a portfolio management services provider.

Mukherjea is a CFA charter holder and a SEBI registered investment advisor. In 2017, upon SEBI’s invitation, he joined SEBI’s Asset Management Advisory Committee. In 2019, Mukherjea was part of the Expert Committee constituted by SEBI to update and upgrade the PMS regulations. He has written three bestselling books: Gurus of Chaos (2014), The Unusual Billionaires (2016) and “Coffee Can Investing: The low risk route to stupendous wealth” (2018).

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected].

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