DCB Bank employees under Sebi glare for alleged insider trading

Mumbai: Securities and Exchange Board of India (Sebi) has issued show cause notices to ten officials of DCB Bank for alleged insider trading. The regulator’s probe into trading activities of these executives in the private lender’s shares between September 19, 2015 and October 13,2015 showed they had sold their holdings before the bank’s growth plans became public, said two people close to the development.

The show-cause notices have been sent to senior executives in treasury and human resources departments then who had access to inside information. It could not be ascertained if these employees are still with DCB Bank.

The regulator has alleged that on September 19,2015, various business unit heads and support units head held a meeting to discuss about new branch strategy and impact of new bank licenses. The announcement on expansion of branches was made to stock exchanges on October 13,2015.

DCB shares plunged 20% on October 14, 2015 in response to the bank’s announcement to increase the number of branches to 300 from 160. The regulator in its notice has alleged that these officials have averted losses by trading in the shares of DCB bank during the UPSI (Unpublished price sensitive information) period.

Sources said the regulator may also have issued separate show cause notices to board of directors and compliance officer of the bank for not maintaining proper due diligence under the code of conduct.

In response to ET’s email query on issue, a DCB bank spokesperson said it had shut the trading window for its employees on October 5, 2015 for announcing the September quarter results.

“Prior to the restricted period, based on then existing internal process, a few employees sold shares earlier acquired through vested ESOPs and appropriate reporting for the same was made to the stock exchanges.”

The spokesperson said, “The Bank is not aware of notice, if any, issued by SEBI to directors or the Bank. The Bank has adequate and effective systems of internal controls for ensuring compliance with its Code of Conduct and indeed regularly reviews its processes so as to meet the standards mandated by the regulators.”

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