Insider trading? Sebi seeks details as surge in ING Vysya Bank stock raises eyebrows

Just days after Securities and Exchange Board of India announced new insider trading norms, the market regulator has sought details from stock exchanges about trades in shares of ING Vysya Bank that were conducted prior to the announcement of ts Rs 15,000-crore merger with Kotak Mahindra Bank last week.

As a Times of India report noted, since October 29, the traded volume of ING Vysya Bank shares on the NSE were over four and half times average volumes in the previous two months. From about 1 lakh shares a day between September 1 and October 28, the average number of stocks that changed hands between October 29 and November 19, a day prior to the deal announcement was nearly 4.8 lakh. Combined with the rise in volumes, the ING Vysya Bank stock price also rose substantially since the time volumes spiked."

The details have been sought to check whether any unusual trading activities took place in the shares and whether such trades could have been conducted in violation of securities market regulations, sources said.

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While there have been reports about possible insider trading and unfair trades, sources said that it is too premature to suggest any such specific violation and details have been sought as of now only to check any unusual trades.

Those under the scrutiny include some senior executives of ING Vysya Bank and shares acquired by them through conversion of ESOPs in run-up to the deal.

Sebi would scrutinise data to ascertain whether there have been any kind of violations of securities market norms, sources said, while adding that the scrutiny is being done as part of Sebi’s surveillance mechanism which gets into play whenever a major deal takes place at a listed company.

Earlier as well, some mega deals, including that between Sun Pharma-Ranbaxy and United Spirits-Diageo, had come under Sebi scanner for such reasons.

The Securities and Exchange Board of India (Sebi) keeps a close watch on trading activities on exchanges through its surveillance mechanism which flags off unusual price changes.

The watchdog has also been making continuous efforts to deal with insider trading issues and last week, its board approved a stronger set of regulations to curb the menace.

Details have been sought from all exchanges including NSE and BSE with regard to trades in shares of ING Vysya Bank.

While this merger was a closely-guarded secret, there were reports earlier that ING Vysya Bank could be acquired by another player, L&T Finance Holdings, although no such move was confirmed by either company at that time.

Following a report earlier this month that it has approached RBI for seeking prior approval to merge or acquire ING Vysya Bank Limited, L&T Finance had said in an exchange filing that it does not comment on speculative news.

“As a part of its normal course of business, the Company keeps evaluating opportunities on both organic and inorganic basis. The investors/stock exchanges would be informed as and when definitive developments take place,” it had said.

Later reports emerged in media on November 19 about a possible merger of ING Vysya Bank with Kotak Mahindra Bank. To this, ING Vysya Bank said in a clarification to the BSE on November 20 that it was “aware of the company’s disclosure obligations under clause 36 of the Listing Agreement”.“The company will abide by its obligations to make appropriate disclosures as and when such disclosures are necessitated by decisions taken by the company,” it had said.

The all-share deal, that would create the country’s fourth largest bank, was announced by the two lenders later on November 20 after markets were closed. However, the shares had seen a big jump of over 7 percent during that day, while a gain of 3.5 percent was registered on the previous day as well.

With inputs from Agencies