MUMBAI: The Securities and Exchange Board of India (Sebi) has imposed a Rs 10 million fine on former Adlabs Films MD Manmohan Shetty for violating insider trading guidelines.

Shetty had violated the norms by selling off 1 million shares of the company before the 24-hour deadline after the decisions of the board meeting was to be made public. 

In an earlier reply to a show-cause notice issued by the regulator, Shetty had termed the sale as an "inadvertent error" without any "malafide intention".

The Adlabs board had met on 22 April 2006 to recommend dividend on equity shares for financial year 2005-06 and to consider the proposal of demerger of the company‘s FM radio business. The meeting was adjourned and later concluded on 23 April that was a Sunday.

The company informed the exchanges about the details of the board meeting, and these were relayed by the bourses shortly before 10 am on 24 April. Within 15 minutes after the information was flashed, Shetty sold 7.5 lakh shares of Adlabs. Later around 3.15 pm, he sold another 2.5 lakh shares.

While the total market volume was 18,39,171 shares, Shetty sold 10 lakh shares at an average price of Rs 402.60 per share on the BSE on 24 April, 2006.

According to the regulator, the rule barring insiders from trading in shares for 24 hours after a board meet is to allow the public to fully understand the information and prevent insiders from getting an ‘early mover advantage‘.

SEBI also noted that Shetty had not sold any share between 1 January and 23 April 2006.