Sebi fines NCP chief's nephew Abhijit Pawar Rs 10 lakh for insider trading

The Securities and Exchange Board of India (Sebi) has levied a fine of Rs 10 lakh on Abhijit Pawar for contravening insider trading regulations in the context of Magma Fincorp, now known as Poonawalla Fincorp Ltd. Pawar, who is the nephew of Nationalist Congress Party (NCP) Chief Sharad Pawar, has been directed to settle the penalty within 45 days.

Sebi received an alert about potential insider trading involving certain entities in Magma's stock in February 2021. A preliminary examination revealed that Magma made an announcement on February 10, 2021, regarding the acquisition of a controlling stake by Rising Sun Holdings Pvt Ltd (Poonawalla Group) in Magma. This information constitutes unpublished price sensitive information (UPSI) under the Prohibition of Insider Trading (PIT) rules. The UPSI period extended from January 11, 2021, to February 10, 2021.

In September 2021, Sebi passed an interim order barring eight entities, including Pawar and Poonawalla Fincorp's managing director & CEO Abhay Bhutada, from the securities market. At the time, Sebi claimed that all eight individuals had made wrongful gains worth Rs 13.58 crore during the period under investigation. The market regulator also impounded the funds.

Sebi issued a show cause notice in September 2022 to Pawar and Bhutada, along with the other accused, alleging insider trading violations in Magma Fincorp's scrip.

In June 2022, orders against Abhay Bhutada were withdrawn after Sebi concluded that matters on the acquisition were received from Pawar and not Bhutada.

Abhijit Pawar was deemed an insider under PIT rules due to his close connection with Adar Poonawalla of Poonawalla Group and his involvement in discussions about the proposed acquisition by Poonawalla Group in Magma. Pawar, who had access to UPSI, maintained frequent communication with Rakesh Bhojgadhiya, the CEO of Sakal Money, a company owned by Pawar.

Bhojgadhiya, through Newgen, received funds of Rs 15 crore from Pawar and his wife during the UPSI period, utilising the funds for share purchases in Magma. Sebi noted that all the illicit gains, along with an additional amount, have already been recovered.

Sebi had established Pawar's violation of insider trading norms based on the facts presented in the show cause notice.

The circular on the National Stock Exchange (NSE) on Tuesday read, "Abhijit Pawar (Noticee) had independent access to the UPSI and was an insider in terms of Regulation 2(1)(g)(ii) of the PIT Regulations, 2015. During the UPSI period, Abhijit Pawar was in frequent communication with Rakesh Bhojgadhiya, who was the CEO of 'Sakal Money', which was owned by Abhijit Pawar."

"The Noticee is hereby imposed with monetary penalty of Rs.10 Lakh (Rs.10,00,000/-) under Section 15G of the SEBI Act, 1992," the order said, Adding that the 45 day period to pay the fine would come into force "with immediate effect."