Securities Exchange Board of India (SEBI): The proceedings against Varun Beverages’ Ravi Kant Jaipuria came to an end after a settlement of Rs.55,90,000 was reached between SEBI’s Internal Committee and Jaipuria’s Authorized Representatives.
Adjudicating Officer Barnali Mukherjee left it open to SEBI to take enforcement actions, in terms of Regulation 28 of the SEBI (Settlement Proceedings) Regulations, 2018, including restoring or initiating the proceedings in respect to which the settlement order was passed against the applicants, if:
- any representations made by the applicant in the settlement proceedings is subsequently found to be untrue; or
- The applicant breaches any of the clauses / conditions of undertakings/ waivers filed during the current settlement proceedings.
Varun Beverages and Pepsico entered into strategic partnership and concluded the same on December 21, 2017. In a press release dated January 04, 2018, it was disclosed that the VBL and Pepsico are going for strategic partnership for larger portfolio of Tropicana, Gatorade and Quaker value added dairy. Right after the press release there was a hike of 9.13% in one trading day.
Two more entities, namely, Spank Management Services Pvt. Ltd (owned and controlled by Patanjali Govind Keswani) and Fenton Investment Pvt. Ltd.(owned and controlled by Arvind Singhania) traded in scrip of VBL during Unpublished Price Sensitive Information(UPSI) period i.e. the period until it was disclosed by the company to Stock Exchange.The directors/ owners of these entities were connected to Lemon Tree Hotels Ltd. where the noticee was also a director. Patanjali Govind Keswani was the chairman and managing director of Lemon Tree Hotel Pvt. Ltd. Based on their connection with the noticee, both Spank and Fenton were suspected entities.It was alleged that the Noticee, being an insider and was in possession of UPSI, has communicated UPSI to Arvind Singhania (Fenton) and to Patanjali Govind Keswani (Spank), violating Section 12A(e) of the SEBI Act,1992 read with Regulation 3(1) of SEBI PIT Regulations, 2015.
Fenton placed an order to buy 15000 shares of VBL during UPSI period and Spank palced an order to buy 17685 shares during UPSI period. These shares were sold on January 05, 2018, immediately after the announcement was made public, post UPSI period.
SEBI observed that as per Regulation 2(1)(n)(iv) of SEBI PIT Regulations, 2015, this type of strategic partnership was constituted Price Sensitive Information(PSI) as a hike of 9.13% was seen in one day. As the period until it was disclosed by the company to Stock Exchange is considered as UPSI, hence, the period from December 21, 2017 to January 04, 2018 will be UPSI period in the case at hand. Ravi Kant Jaipuria was in possession of UPSI as he was privy to the discussion period from March 2017 to January 04, 2018.
SEBI conducted an investigation for the period December 05, 2017 to February 28, 2018. It then appointed an Adjudicating Officer on October 11, 2021 to enquire and adjudge under the Section 15G(ii) of the SEBI ACT. The Settlement terms were placed before the High Powered Advisory Committee (HPAC) on May 10, 2022 and the committee stated that the adjudication proceedings may be settled on payment of the aforesaid amount and the same was communicated to applicant on June 10, 2022.
In light of the fact that Ravi Kant Jaipuria has remitted the respective settlement fees by way of online transfer on June 10, 2022 and the receipt of the same has been confirmed by SEBI on June 17, 2022, the adjudicating authority disposed off the ajudication proceedings initiated against Ravi Kant Jaipuria.
[Varun Beverages Limited, In re, Settlement Order No: SO/BM/DS/2022-23/6779, Order dated 21.06.2022]