Biyani Wins Appeal: SAT Overturns Insider Trading Ban in Future Retail Demerger Case

Biyani Wins Appeal: SAT Overturns Insider Trading Ban in Future Retail Demerger Case

Kishore Biyani, chairman of Future Retail Ltd (FRL), and other promoters received a major reprieve this week as the Securities Appellate Tribunal (SAT) overturned a one-year securities market ban imposed by the Securities and Exchange Board of India (Sebi) in an alleged insider trading case.

The SAT ruled that the information used by the promoters for trading decisions wasn’t “unpublished price sensitive information” (UPSI) as it had already been widely reported in media interviews and news articles before their trades. This countered Sebi’s claim that the promoters utilized insider knowledge for financial gain.

Key highlights of the SAT ruling:

  • Information already public: The tribunal found that details about the planned demerger of certain FRL businesses, which Sebi considered UPSI, were already in the public domain due to prior media coverage.
  • Past Sebi rulings considered: SAT acknowledged two previous Sebi rulings stating that information accessible through public sources like newspapers and interviews can’t be classified as UPSI for trading purposes.
  • Sebi order quashed: Based on the aforementioned points, the SAT quashed Sebi’s order banning the promoters from the market and imposing fines.

Context of the case:

  • Sebi accused Future Corporate Resources, an entity linked to FRL promoters, of trading FRL shares between March and April 2017 using knowledge of a planned demerger not yet publicly disclosed.
  • Sebi imposed a one-year market ban on the promoters and ordered disgorgement of Rs 17.78 crore in alleged unlawful gains.

Impact of the SAT ruling: This verdict clears the names of the FRL promoters from the insider trading charges and potentially paves the way for future business endeavors. However, it also underscores the importance of transparent information dissemination in the financial sector to ensure fair market practices.