Digital denies insider trading charges

BANGALORE: Bangalore-based software major Digital GlobalSoft, has issued a clarification in response to a recent order issued by the Securities and Exchange Board of India, barring Samir Arora, former fund manager of Alliance Capital Mutual Fund (ACMF), from the capital market. The capital market regulator has cited the example of Digital GlobalSoft to prove its point.






In a clarification issued on August 10, 2003 Digital said that, ‘The Digital management understands that various and multiple aspects have been considered and evaluated by SEBI to arrive at and issue its above-mentioned order.





Digital has implemented and adopted comprehensive insider trading policy guidelines and processes, which are in compliance with SEBI regulations and support best practices of corporate governance. The company and its concerned officials have been compliant withand conform to its policy guidelines and processes, SEBI regulations, trading restraints and the applicable disclosure norms. Digital Globalsoft therefore maintains its view that it does not believe that any irregular flow of information could have emanated from within the company in this regard.





`Digital practices highest standards of corporate behaviour, and as always the company will, should it be required, offer and provide to Sebi its complete support and cooperation on this subject.’





According to the Sebi dictate, ‘It was revealed by the investigation that Arora has disposed off the entire holdings of 14.66 lakhs shares of Digital GlobalSoft, on behalf of ACMF and ACM, immediately after the independent valuer submitted his report, and prior to the announcement of merger ratio for the de-merger of HPS-ISO division of Hewlett Packard India with Digital Globalsoft.’ It also expresses that ‘the merger ratio was perceived as adverse by Samir Arora as well as the market. Incisive analysis of the circumstantial evidences, corroborate that Arora has traded in the scrips of Digital Globalsoft on the basis of unpublished price-sensitive information obtained due to his close nexus with the insiders of the company, and thereby averted losses to the tune of approximately Rs 24 crore for the funds managed by him.’





The order was issued by Sebi on August 9, 2003 under Sections 11B and 11(4) (b) of Securities and Exchange Board of India Act, 1992.
As expected, the Digital scrip opened weak at Rs 448.80 compared to its Friday`s close of Rs 477.20. However, the stock recovered from its intra-day low of Rs 438.80, and was quoting at Rs 459.55 levels at 11:15 am today.

Source: IRIS