Zees Goenka Settles Insider Trading Case

In August 2021, the capital market regulator had issued an order against entities for carrying out insider trading activities in the shares of Zee Entertainment following the launch of rent-a-movie service, ZEEPLEX, in September 2020.

In its investigation, Sebi had found some “unpublished and price-sensitive information" which were not declared by the media company.

Subsequently, on 22 December 2022, Sebi issued a show cause notice to Goenka as he was at the helm of affairs in the company.

Essentially, price-sensitive information refers to information that should not be available in public domain, such as financials, dividends, mergers and demergers, business plan, acquisitions or change in capital structure, and if accessed, can influence the price of a company’s securities.

Sebi said as MD and CEO Goenka failed to ensure adequate internal controls to identify unpublished price-sensitive information. Sebi said information related to the launch of ZEEPLEX was a positive development about the company’s expansion plans, announced during covid and was price sensitive information under the Prohibition of Insider Trading Regulations.

According to the regulation, the chief executive, managing director or other senior executives of listed firms or intermediaries must put in place adequate and effective systems of controls to ensure compliance with the requirements to prevent insider trading.

After receiving a show cause notice from the markets regulator, Goenka filed an application for settlement, without admitting or denying the findings and conclusions of law.