Insider Trading Violation (Banks Code)
MUNEESH DHAWAN
(Querist) 25 July 2008
This query is : Resolved
Dear Friends, my client is a manager in a pvt bank in delhi..he has received insider trading violation letters, first letter states violation of code for first time for shares bought & hence warning letter issued..second letter states second violation for scrips sold which were bought in same April month, hence warning letter,accompanied with Rs. 1000 as fine with forwarding his name to audit committee of the bank as well as SEBI.
It is pertinent to mention that he has not bought or sold scrips of that bank or its group companies but as per bank’ s code he has violated the norms/policy as amount of trading exceeded 10 lacs though that was margin trading. My client has been trading into shares since three years much before joining bank (he joined in Dec 2007). He was completely ignorant of the insider trading policy & trading was carried out in complete ignorance of the rules/policy..mails were sent to all employees by bank regarding this policy but were not read by my client.
Now he is expecting third violation letter also which states as policy termination from the bank..my client first got information regarding his trading from bank on 8th July ... and thereafter stopped trading in shares since then...however bank will consider violations of policy since he joined bank irrespective that mail was first sent regarding his trading on his demat account on 8th July...they ought to have intimated then and there in April when first violation happened rather then in July till when it was continuing.
Please suggest what to advice my client so that he is not terminated and that too for his ignorance which was unintentional..to add last point that there were net loss arising from the transactions and no profits accrued.
Prakash Yedhula
(Expert) 04 January 2009
A reply to the warning letter can be sent stating the facts and that the violations were not deliberate and intentional but due to inadvertence.
