Manappuram Finance gets SEBI notice over 2013 'insider trading'; shares fall up to 11%

Bengaluru: Indian lender Manappuram Finance Ltd said on Friday it got a show-cause notice from the market regulator alleging that its officials disclosed price-sensitive information to a research analyst firm in 2013. The Securities and Exchange Board of India (SEBI) has issued show-cause notices to five asset management companies, including SBI Fund Management and BNP Paribas, for allegedly using price-sensitive information to trade in Manappuram Finance’s shares in March 2013, the Business Standard newspaper had reported earlier in the day. [caption id=“attachment_4279131” align=“alignleft” width=“380”] Representational image. Reuters[/caption] The report said a notice had also been issued to research firm Ambit Capital. 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 report said, citing the notice. Shares of Kerala-based Manappuram Finance, which lends against gold, fell as much as 11 percent in their sharpest intraday drop since August 2017 on Friday, before settling 4.1 percent 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, SBI Fund Management and BNP Paribas did not immediately respond to Reuters’ request for comment, while Ambit Capital was not immediately reachable.