BENGALURU (Reuters) -Poonawalla Fincorp said on Thursday Abhay Bhutada had resigned as the managing director of the non-banking financial firm, a day after India's market regulator banned him and seven others from the securities market for alleged insider trading.
Bhutada was found guilty of sharing information about billionaire Adar Poonawalla-owned Rising Sun Holdings' proposed stake buy in the company before it was public knowledge, the Securities and Exchange Board of India (SEBI) said in an interim order https://www.sebi.gov.in/enforcement/orders/sep-2021/in-the-matter-of-magma-fincorp-limited-now-known-as-poonawalla-fincorp-limited_52613.html on Wednesday.
Bhutada denied the allegations in an email sent to the company, an exchange filing showed. He did not respond to repeated requests for comment on Thursday.
Rising Sun Holdings acquired earlier this year a majority stake in Poonawalla Fincorp, formerly called Magma Fincorp, via preferential issue of up to 34.56 billion rupees ($470.62 million). Bhutada was at the time the chief executive officer of Poonawalla Finance, a private unit of Rising Sun Holdings.
Based on call records, financial dealings and bank statements, the SEBI said it found that several entities related to Bhutada traded in Magma stocks before details of the stake buy were disclosed to the stock exchanges.
Poonawalla Fincorp said in a statement that Bhutada had decided to step down in the broader interest of the company and its stakeholders.
Group Chief Executive Vijay Deshwal will continue to run the operations of the company, it said in an emailed statement.
The SEBI's order also directs bank accounts of all entities involved to be seized to the extent of their liability in the insider trading case of 135.8 million rupees.
Shares of Poonawalla Fincorp ended 5% lower on Thursday.
($1 = 73.5160 Indian rupees)