SEBI’s Adjudication Order on Insider Trading in Nucleus Software Exports Limited

The Securities and Exchange Board of India (SEBI) has issued an Adjudication Order in the matter of insider trading involving trading in the scrip of Nucleus Software Exports Limited.

Background

Nucleus Software announced its FY23 financial results on May 26, 2023, reporting a 76.45% increase in quarterly profit and a 209.66% YoY jump. The market reacted strongly, with the stock price rising by nearly 20% on the day of the announcement and over 58% in four trading sessions.

Investigation & Findings

SEBI’s probe revealed that:

• Mr. Nitin Kumar Garg, an employee of Nucleus, had access to Unpublished Price Sensitive Information (UPSI) relating to the financial results.

• He passed this information, along with funds, to his cousin Mr. Anupam Gupta, who traded in the company’s shares ahead of the results.

• Anupam purchased 3,020 shares before the announcement and sold them shortly after, making profits of approximately Rs. 8.98 lakhs.

• Evidence included bank transfers, WhatsApp chats, call records, and admissions under oath, clearly establishing the flow of UPSI.

  
  

Violations

• Nitin Kumar Garg: Violated Regulation 3(1) of SEBI (Prohibition of Insider Trading) Regulations, 2015 by communicating UPSI.

• Anupam Gupta: Violated Regulation 4(1) of the same regulations by trading on UPSI.

• Both were also held liable under Sections 12A(d) & (e) of the SEBI Act, 1992.