In a significant insider trading case, SEBI has resolved accusations against two individuals linked to the merger of HDFC Ltd. and HDFC Bank. The Securities and Exchange Board of India (SEBI) ended its probe after Mr. Nimai Parekh and Mr. Rahil Dalal consented to pay fines of Rs 39 lakh and Rs 35 lakh respectively.

SEBI’s inquiry, which lasted from November 1, 2021, to April 30, 2022, focused on whether certain individuals utilized Unpublished Price Sensitive Information (UPSI) for trading in HDFC stocks prior to the public merger announcement on April 4, 2022.

Mr. Parekh, a Deloitte Touche Tohmatsu India LLP employee involved in the merger valuation, reportedly had access to confidential information from March 29, 2022. SEBI claimed he disclosed this information to his friend, Mr. Dalal, who then informed his father.

Trading data indicated Mr. Dalal’s father, Rupesh Dalal, made substantial profits by trading call options of HDFC Ltd. and HDFC Bank just before and after the merger announcement, yielding profits of Rs 5.67 lakh and Rs 2.52 lakh.

Opting not to contest the allegations, both accused settled the case under SEBI’s Settlement Proceedings Regulations, 2018. The settlement terms, proposed in a meeting with SEBI’s Internal Committee, were ratified by the High Powered Advisory Committee on September 6, 2024, and the settlement payment was completed in December 2024.

Although the case has been settled, SEBI warned that any false statements or violation of the settlement terms could lead to a reopening of the investigation. The order took effect immediately as of December 20, 2024.