Indian regulator bars Kishore Biyani from securities market for insider trading

Kishore Biyani (Livemint)

India’s markets regulator on Wednesday barred Future Group founder Kishore Biyani and several related entities, including his brother Anil, from accessing the securities market in an insider trading case dating back to 2017.

Biyani, a pioneer of Indian retail, has also been barred from transacting in securities of Future Retail for two years. The regulator said it reached the decision after a probe into the 2017 case pertaining to the use of unpublished price-sensitive information to trade in Future Retail shares.

The decision comes even as Biyani’s sale of his businesses to Mukesh Ambani’s Reliance Retail is facing legal challenges from Amazon.com Inc.

Apart from the ban, the Securities and Exchange Board of India (Sebi) also ordered a penalty and disgorgement of illicit gains from Biyani-family-controlled entities that include Future Corporate Resources Pvt. Ltd (FCRL), FCRL Employee Welfare Trust and several individuals found to be acting in connivance with the Biyanis.

In its order, the regulator said that all aforesaid persons and entities were found to be involved in insider trading in the shares of group flagship Future Retail Ltd (FRL) prior to an announcement about the consolidation of the group’s offline and online home retail business into a single entity. Following the announcement in April 2017, shares of Future Retail hit a record high.

In April 2017, Future Retail announced the consolidation of its home retail business, operated through its HomeTown stores, and the e-commerce home retail business operated by Blue eServices (which owned Fabfurnish.com) into a single company for better business synergies and to bring “greater visibility on the performance of the home retail business and e-commerce home retail business”.

The investigation found that while the consolidation became public knowledge on 20 April, Biyani and his associates entities had begun buying FRL shares from March 2017 onwards after the upcoming merger was internally approved on 10 March.

Sebi’s probe revealed that FCRL and FCRL Employee Welfare Trust traded in the shares of FRL between 10 March and 20 April 2017, when the plan was formally announced to the market. Orders for purchase of shares of FRL during the UPSI (unpublished price sensitive information) period, i.e. purchases made on 29 March 2017 and 30 March 2017 were placed through written instructions of Anil Biyani, said Sebi.

“Funds for the said purchase of shares of FRL were transferred through RTGS from Future Corporate (a Biyani family-controlled entity) to its stockbroker Indiabulls under authorization from Kishore Biyani and Anil Biyani. “In view of all these facts, I find that Kishore Biyani and Anil Biyani, who were insiders of FRL and were holding beneficial interest in 32% and 15% shares in FCRL, respectively, were the persons who took the decisions for impugned trades on behalf of FCRL, in the shares of FRL during the UPSI period,” said Ananta Barua, whole-time member, Sebi, in his order.

The regulator has sought a clawback of benefits from the illegal trade, amounting to 17.78 crore along with an interest at the rate of 12% per annum from 20 April 2017, from Future Corporate Resources, Kishore Biyani and Anil Biyani.

Future Corporate Resources said in a statement that the ruling will be challenged. “On merits, the Sebi order is untenable since it treats a well-anticipated and publicly well-known impending reorganization of the home furnishing businesses that the Future Group effected in 2017 to be unpublished information. The Order will be challenged in exercise of the statutory right to appeal.”

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.