In Brief
Abhijit Rajan, Chairman and Managing Director of Gammon Infrastructure Projects Limited (GIPL), sold over 1.44 crore shares for approximately Rs. 10.28 crores on 22 August 2013. The Board had authorized termination of two shareholders' agreements with another company on 9 August 2013 (which GIPL disclosed on 30 August 2013, after the sale). SEBI found Rajan guilty of insider trading and ordered disgorgement of profits. The Securities Appellate Tribunal allowed his appeal, holding the information was not price sensitive and the sale was compelled by a critical Corporate Debt Restructuring obligation for the parent company. The Supreme Court upheld the Tribunal's order, holding that while the termination information was price sensitive and Rajan was an insider, the sale did not constitute insider trading because it was a compelled transaction lacking the requisite profit motive—a key element distinguishing insider trading from mere possession of UPSI.
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