The stock of Polaris Financial Technology (formerly, Polaris Software Lab) crashed 6.2 per cent or Rs 8.35 to Rs 125.85 on the NSE after SEBI barred its CEO, Arun Jain, from the securities market for two years on charges of insider trading.
On the NSE, 26.5 lakh shares changed hands against its two-week average of 7.56 lakh shares. What surprised many analysts is SEBI reopening the case and awarding a punishment after settling the issue through the consent mechanism.
The SEBI action was quite ‘surprising’ and ‘unexpected’ said a senior official of a broking firm. Despite the SEBI order, the fundamental remains strong for the company, he said, adding that, however, some foreign institutional investors might take a negative view on the stock.
The case relates to dealings that had happened in 2000. SEBI in its findings said Polaris Holding Private Ltd, a promoter group company, had sold 15,080 shares of Polaris Software between August 23, 2000 and September 19, 2000 through Chennai-based broker Allsec Securities. However, the case was settled through the consent mechanism (without admission or denial of guilt and on payment of consent charges of Rs 7 lakh) on July 21, 2008.
Since the consent settlement does not bar SEBI from taking further action, if it is of the view that the alleged violations warrant multiple civil actions, it issued a separate show-cause notice to Arun Jain on December 26, 2011.