Murugappa Group
Murugappa Group

A Vellayan, chairman of the ₹24,300-crore Murugappa Group, stepped down from his post on Friday following charges of insider trading against him and three others by market regulator Securities and Exchange Board of India (Sebi).

In its order passed on Thursday, the regulator had charged Vellayan with passing 'price-sensitive information' pertaining to the acquisition of Sabero Organics Gujarat by Coromandel International in 2011, according to Business Standard.

Besides him, others charged are V Karuppiah, A R Murugappan and Gopalkrishnan C. Vellayan's grandfather and Murugappan's mother are siblings. Karuppiah is the son-in-law of Murugappan.

"In keeping with family values and tradition, he has stepped aside from the chairmanship of the Murugappa Group Corporate Board and of Coromandel International and EID Parry India until this matter is resolved," said a spokesperson for the Group.

The Group said that Sebi has linked Vellayan merely on the basis of suspicion.

The regulator had also directed the four persons to return 'unlawful gains' worth ₹2.15 crore, including interest at the rate of 12 per cent a year since 2011.

The case pertains to 3,19,000 shares of Sabero purchased by a person called Gopalkrishnan C.

Sebi said that Gopalkrishnan received ₹1 crore from Subramaniam M, son of Murugappan, on 28 May, 2011 and bought shares the same day. He sold the shares 24 days later, making ₹1.3 crore 'unlawful gains' in the process, the Sebi order said.

Coromandel bought Sabero on 31 May, 2011.

V Karuppiah also made gains worth ₹16 lakh by trading in the shares of Sabero.

The Sabero stock rose from ₹58 per share on 13 May, 2011 to ₹130 on 14 June, 2011. 

"The funding to Gopalkrishnan C, through layered transactions by a person connected with the chairman of Coromandel, prima facie appears that the trading by Gopalkrishnan C was based on the knowledge of UPSI (unpublished price-sensitive information)," Sebi member Prashant Saran said in the order.

"Further, the trading of V Karuppiah (HUF) also appears to be based on the knowledge of UPSI. As detailed, it appears the UPSI had passed on from A Vellayan and A R Murugappan," Sebi member Prashant Saran said in the order. 

The regulator has given 21 days to the four persons to file their reply. 

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