Apart from Jhunjhunwala, Aptech board members Utpal Sheth, Ramesh S Damani and Madhu Jayakumar are also learned to have filed consent applications with Sebi. Sheth is the CEO of Jhunjhunwala’s asset management firm Rare Enterprises.
Consent applications are out-of-court settlements over securities law violations. They are negotiated between the regulator and the entities concerned, without admission of guilt and without denial of liabilities, and involves the payment of a fee. The consent mechanism is a discretionary exercise on the part of the regulator.
The regulator had issued show-cause notices to Jhunjhunwala and Aptech’s board members, asking why action should not be taken against them for securities law violations.
Jhunjhunwala said he didn’t want to comment on the matter as it’s sub judice. Sheth, Damani, Jayakumar and Sebi didn’t respond to email queries.
The consent process involves several stages. Once settlement terms are agreed upon by the regulator and the entities, they are placed before an independent advisory committee.
Based on the panel’s recommendations, Sebi’s two whole-time members pass the final order, which is binding on the applicants.
Sources said the regulator is expected to pass the consent order in the Aptech case soon.
Aptech is 49% owned by Jhunjhunwala and his family and is the only company in his portfolio over which he wields management control.
Sebi has been examining alleged insider trading deals in Aptech shares that took place between May and October 2016.
Jhunjhunwala had previously appeared before Sebi over the matter. Known as India’s Warren Buffett for his stock-picking skills, Jhunjhunwala is one of the country’s richest individual investors, having a net worth of $3.3 billion, according to Forbes. Son of an income tax officer, Jhunjhunwala started trading in shares while still in college. He began with $100 in 1985 when the Sensex was at 150 points; on Friday, the BSE benchmark closed above 50,000.
He first bought into Aptech in 2005 at 56 a share. Since then, his stake — along with those of family members — has risen to 49%, with a market value of 421 crore based on Aptech’s closing price of 216 on the BSE Friday.
Jhunjhunwala has opted for a settlement with Sebi in the past too–in a suspected insider trading case in Geometric, which is now part of HCL Technologies. He settled the matter through consent by paying Rs 2.5 lakh.