SEBI’s Ban Reversal Sends Lux Industries Stock Soaring 10%

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Tuesday saw a 10% increase in Lux Industries shares, reaching a high of Rs 1,530 on the NSE. This was in response to the Indian market regulator’s decision to lift the securities market suspension it had placed on 14 companies due to suspected insider trading in the firm.

The Securities and Exchange Board of India (SEBI) issued a 10-page decision in which the regulator stated that the charges brought against them were unfounded. According to SEBI’s directive, among the 14 entities is Udit Todi, the son of Lux’s managing director, who presently serves as the company’s executive director.

With its interim order from January 2022, SEBI ordered the impoundment of Rs 2.94 crore in ill-gotten gains and prohibited 14 entities from engaging in insider trading. Later, in May 2022, SEBI verified the instructions.

Following the investigation’s conclusion, SEBI said that the restraining order against these firms, which had been granted through an interim order and a confirmatory necessity, doesn’t need to be upheld.

Reversing the securities market prohibition, SEBI noted that the “absence of evidence made it impossible to establish the UPSI’s communication flow.” The accusations made cannot be upheld since there is insufficient information in the file to demonstrate how the UPSI was conveyed.”

With regards to Udit Todi’s transmission of Unpublished Price Sensitive Information (UPSI) to Mohd. Mujtaba Khan, SEBI noted that Todi had only placed one call to Khan on May 14, 20.

Udit Todi spoke with Mohd. Mujtaba Khan over the phone once during the Unpublished Price Sensitive Information (UPSI) period. SEBI, however, was unable to locate any additional proof of Todi or any other entity communicating with the UPSI.

SEBI further pointed out that Sanjeev Bubna’s trading was not based on the UPSI and was conducted through companies such as Indi Stock Pvt Ltd.

Furthermore, no material was found to prove any UPSI communication between Udit Todi and Mohd. Mujtaba Khan, as well as from Khan to other entities including Evermore Stock Brokers Pvt Ltd, Akshay Kapoor, Suyash Somani, Avani Todi, Bubna, Shubham Somani, Dinero Finance and Investments Pvt Ltd, Anju Somani, and Sunder Somani.

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