Insider Trading in HDFC Merger: Deloitte Employee And His Friend Fined Rs 74 Lakh by SEBI

The Securities and Exchange Board of India (SEBI) has closed its investigation into insider trading allegations surrounding the merger of HDFC Ltd. and HDFC Bank Ltd. after two individuals, Mr Nimai Parekh and Mr Rahil Dalal, agreed to pay a settlement of Rs 39 lakh and Rs 35 lakh, respectively.

SEBI Settles Insider Trading Case Linked to HDFC Merger
SEBI initiated an investigation to check if certain individuals had used Unpublished Price Sensitive Information (UPSI) to trade in the shares of HDFC Ltd. and HDFC Bank.

The investigation period spanned from November 1, 2021, to April 30, 2022, as SEBI focused on suspicious trades ahead of the merger announcement on April 4, 2022.

Mr Parekh, who was part of the valuation team at Deloitte Touche Tohmatsu India LLP, had access to confidential details about the merger as early as March 29, 2022. SEBI alleged that he shared this sensitive information with his close friend, Mr Rahil Dalal, who then passed it on to his father.

Details On The Insider Trading
Trading records revealed that Mr Dalal’s father, Rupesh Dalal, bought call option contracts for HDFC Ltd. and HDFC Bank just before the merger announcement and sold them after the news broke, making a profit of Rs5.67 lakh and Rs 2.52 lakh, respectively. SEBI alleged that this trading activity was based on the UPSI shared by Mr Parekh and Mr Dalal.

‘Mr. Rupesh Satish Dalal is the father of Applicant 2 and karta of Rupesh Dalal HUF. From the trading details of Rupesh Dalal HUF it was observed that it had bought multiple call option contracts of HDFC Ltd. and HDFC Bank Ltd. prior to the announcement and sold the same post the announcement and earned a profit of Rs. 5.67 lacs in HDFC Ltd. and Rs. 2.52 lacs in HDFC Bank Ltd,’ as mentioned in the report by SEBI. 

SEBI Settlement 
Rather than contest the charges, both individuals filed for settlement under SEBI's Settlement Proceedings Regulations, 2018. In a meeting with SEBI’s Internal Committee, they proposed settlement terms, which were approved by the High Powered Advisory Committee (HPAC) on September 6, 2024.

SEBI demanded Rs39 lakh from Mr. Parekh and Rs 35 lakh from Mr. Dalal as part of the settlement, which was paid by both individuals in December 2024.

SEBI’s Warning
SEBI’s order, issued on December 20, 2024, states that while the case is closed, any false representations or breaches of the settlement terms may reopen the investigation.

‘This Settlement Order is passed on this 20th day of December, 2024 and shall come into force with immediate effect,’ reads the SEBI report.