Sebi seeks Zee trade details from Nippon Life AMC

The Securities and Exchange Board of India (Sebi) is probing whether a few employees of Nippon Life Asset Management, India’s fifth largest mutual fund, traded in Zee Entertainment shares on the basis of insider information when it crashed on January 25, 2019.

A person with direct knowledge of the matter said that the capital markets regulator has sought information from the fund house on all the trades of its employees in Zee shares on that day as well as its employees’ bank account details.

Sebi has also asked for details of all the people involved in the decision making on the trades, the person added. An email query sent to Sebi on the issue didn’t elicit any response.


A Nippon Life AMC spokesperson said: “Sebi keeps asking for information on various things in the normal course from market participants which is adequately shared with the regulator from time to time, ensuring compliance. As a policy, we will not like to comment on details of any particular company or query or instance raised.”

Stock Fell 34%
On January 25 last year, Zee shares tanked 34% after a media report suggested an alleged link between the media house’s promoter and Nityank Infrapower and Multiventures, a company under the scrutiny of the Serious Fraud Investigation Office (SFIO), for deposits of over Rs 3,000 crore during or after demonetisation. Subsequently Zee’s promoter, Essel Group, issued a statement saying Nityank didn’t belong to the enterprise.

The stock slump exacerbated the problems for Essel’s promoters led by Subhash Chandra, who were unable to bring in collateral for the loan taken from mutual funds and finance companies. They had borrowed using shares of their group companies as collateral.

Sebi has also asked whether Nippon Life or any person involved in decision making received any information or funding from anyone to trade in Zee shares. The regulator has asked whether Nippon Life or its directors or former promoters or persons involved in decision making were in any manner associated or connected ever either directly or indirectly in any capacity, whether in the past or present with Zee or its promoters or any of its directors.

The regulator has asked the fund house’s trustees to respond to its letter along with the documents.

The Sebi probe relates to the period when Anil Ambani’s Reliance Capital was still running the business. Japan’s Nippon Life increased its stake in the joint venture to 75% from 43% in September 2019 with Reliance exiting the business. Nippon Life shares, which closed at Rs 275.25 on Wednesday, has fallen 22% so far in 2020.

Soon after the crash in the share prices, Essel said it had entered into a “standstill” agreement with the lenders that they would not sell the group’s pledged shares and give the management time to repay the loans. Nippon Life AMC—then Reliance Nippon Life-- had stayed away from this agreement with Essel Group.