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Sebi report pulls up Pendse for insider trading

BS Markets Bureau in Mumbai

An internal Securities and Exchange Board of India report has found Dilip Pendse, former managing director of Tata Finance, guilty of violating the Sebi (Insider Trading) Regulations, 1992, by using unpublished price sensitive information.

According to the report, Pendse communicated this information to his wife Anuradha Pendse and an acquaintance, Anjali Beke. "The communication was neither in ordinary course of business nor was this required to be communicated under law," the report said.

Anuradha Pendse, Beke and their companies are alleged to have sold 2,90,000 Tata Finance shares based on this information. The report was submitted to Sebi Chairman G N Bajpai earlier this week.

When contacted, Pendse refused to comment saying the matter is sub-judice. "I have not received any show-cause notice from Sebi. As and when that comes, I will deal with it in an appropriate manner," he told Business Standard.

Pendse's counsel Harihar Bhave, said, " I am surprised how the media has got hold of an internal Sebi report even before my client has been issued a show-cause notice on his alleged misdeeds."

The Sebi report also said brokers Jhunjhunwala (JSBPL) and Malini Sanghvi (MSSPL), along with Anuradha Pendse, Anjali Beke, and a few other entities 'appear to have violated the provisions of Regulation 6 (d) of Sebi (Prohibition of Fradulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995.'

The Sebi investigations found that the two persons, Anuradha Pendse and Anjali Beke, after receipt of the alleged price sensitive information, sold 2,90,000 shares of Tata Finance in their own names and in the names of their companies -- Nalini Properties Pvt Ltd and Anjudi Properties Pvt Ltd.

Nalini Properties is a company controlled by Mrs Pendse, and by Dilip Pendse's father.

"The dealing for 2,90,000 shares of Tata Finance Ltd. was in violation of Regulation 4 of Sebi's Insider Trading Regulations," the report has concluded.

The off-market transactions for 2,90,000 shares of Tata Finance took place between March 28 and March 30, 2001 and not during September 11 and 13, 2000 as had been contended.

The brokers Jhunjhunwala and Malini Sanghvi gave ante-dated contracts in Form B to the sellers. *

The brokers, in turn, issued the contracts to the ultimate buyers, India Emerging and Sarjan Securities.

The Sebi report said the back-dating and falsification of contract notes, bills and books of accounts was done with a view to create an illusion that the transactions had taken place only during September 2000 even though the transaction had actually taken place in March 2001.

By doing so, Jhunjhunwala, Malini Sanghvi, Anuradha Pendse, Nalini Properties, Anjudi Properties, Anjali Beke, India Emerging and Sarjan Securities have violated the provisions of Sebi's Fraudulent and Unfair Trade Practices regulations, the Sebi report says.

Sebi's investigation started when it received a complaint from Tata Finance alleging various irregularities and violations committed by Pendse relating to disclosure of the letter of offer of March 2001 for its rights issue of convertible preference shares and alleged insider trading. It asked Sebi to investigate the matter.

According to Sebi, some of the complaints made by Tata Finance pertain to the Reserve Bank of India and the Department of Company Affairs to whom the complaint has been forwarded. The former Sebi chairman, D.R. Mehta, had ordered an investigation into the allegations of insider trading and violations of fradulent and unfair trade practices -- two issues which come under the capital market regulator's purview.

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