India's markets regulator Securities and Exchange Board of India (SEBI) is investigating possible instances of insider trading at salt-to-software conglomerate Tata Sons and its group companies.
According to an Economic Times report, Sebi is studying the group's corporate structure and its subsidiary companies to see if they were in compliance with the country's insider trading rules. Under insider trading laws, which are punishable offenses, family and non-board company executives should not be made privy to strategic information that can significantly impact the stock price of the company such as an acquisition or a sale before such information has been made public and approved by the board.
Specifically, Sebi is said to be examining if strategic information was leaked to Tata Sons directors and Tata Trusts nominees before the information was approved by the companies' boards, said the ET report.
Tata Sons Former Chairman Cyrus Mistry has alleged that key certain Tata Trusts trustees were present when Tata Power's CEO made presentations to Tata Sons board on its proposed acquisition of Welspun Renewables.
Additionally, Mistry has said that two Trusts' directors left in the middle of a Tata Sons board meeting, holding up the meeting for almost an hour to allegedly obtain instructions from Ratan Tata.
According to the report, SEBI will "make up its mind" in the next few days. A Tata Sons spokesperson could not immediately be reached for comment.
Penalties if found guilty of Insider trading could include imprisonment for up to 10 years or fine of up to Rs 25 crores or three times the amount of profits made through the trade of the company's securities based on inside information.