HDFC-HDFC Bank merger: Sebi penalises trader for insider trading
ADVERTISEMENT The case revolves around trading activity carried out by Rupesh Dalal, the Karta of the HUF, just days before the April 4, 2022, announcement that HDFC would merge into HDFC Bank.
Sebi's investigation found that Dalal had purchased a series of call options in both stocks on April 1, 2022—three days before the official disclosure. The positions were squared off immediately after the announcement, yielding substantial profits: Rs 5.67 lakh from HDFC options and Rs 2.52 lakh from HDFC Bank.
Sebi's order concluded that Dalal was in possession of Unpublished Price Sensitive Information (UPSI), received through an indirect channel.The regulator alleged that Mr X, a member of Deloitte's valuation team working on the merger, had passed UPSI to his friend Mr Y (Dalal's son), who then communicated the same to Dalal.Both X and Y had already settled cases with Sebi earlier. The circumstantial evidence, including frequent calls and meetings between X and Y around the trading dates, supported the conclusion that Dalal traded on UPSI.
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The regulator dismissed Dalal's defence that his trades were based on technical analysis, noting that his history showed little to no activity in derivatives, and his aggressive positions on that specific date were uncharacteristic.
The Rs 10 lakh penalty is to be paid within 45 days. The order underscores Sebi's continued emphasis on market integrity and its increasing reliance on circumstantial evidence and call data records in cracking down on insider trading.
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