June 7, 2019 / 12:04 PM / 6 months ago

Manappuram Finance gets notice over alleged insider trading

BENGALURU (Reuters) - Indian lender Manappuram Finance Ltd said on Friday it received a show-cause notice from the Securities and Exchange Board of India (SEBI) alleging that its officials disclosed price-sensitive information to a research firm in 2013.

Research firm Ambit Capital and five asset management companies, including SBI Fund Management and BNP Paribas, were issued show-cause notices for allegedly using price-sensitive information to trade in Manappuram Finance’s shares, the Business Standard newspaper reported https://earlier in the day.

The decision by these fund houses to exit Manappuram Finance’s stock during the period appeared to be based on an Ambit research report that was “leaked” to them before the earnings announcement for the fourth quarter of 2012-13, the newspaper reported citing the notice.

Shares of Kerala-based Manappuram Finance, which lends against gold, fell as much as 11% in their sharpest intraday drop since August 2017 on Friday, before settling 4.1% lower.

The SEBI notice comes at a time when so-called shadow banks are facing a severe liquidity crunch, triggered by a series of defaults at Infrastructure Leasing and Financial Services.

Manappuram Finance said the notice did not allege any “malafide intent” or that any unlawful gain was made or sought to be made by its officials, adding that it was examining the contents of the notice and was seeking legal advice.

SEBI and SBI Fund Management did not immediately respond to Reuters’ request for comment, while Ambit Capital was not immediately reachable. BNP Paribas declined to comment.

Reporting by Chris Thomas in Bengaluru; Editing by Subhranshu Sahu and Shailesh Kuber

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