Samir Arora, the flamboyant Singapore-based fund manager of Alliance Capital, plans to float a new asset management company with Rana Talwar's Sabre Capital is likely to be delayed.
The Securities and Exchange Board of India's order on Saturday directs Arora not to buy, sell or deal in securities in any manner directly or indirectly on an immediate basis till further orders. Samir's new venture was slated to take off in three months.
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Samir had joined hands with Henderson Global Investors to purchase the AMC. Sebi's order said, "Arora's arrangement with Henderson Global Investors for the purchase of the stake of ACM in ACAML was in conflict with his interest as a fund manager."
It alleged that Arora has tried to create panic in the market with his announcement that he would quit the fund. Redemptions crossed Rs 1,300 crore (Rs 13 billion) from Alliance schemes in two months.
"His conduct erodes investors' confidence and is detrimental to their interests as well as the safety and integrity of the securities market. His association in the securities market in any capacity is prejudicial to the interests of investors and the safety and integrity of the securities market," the order said.
Sebi has initiated action against Arora on alleged insider trading in software maker Digital Globalsoft and non-disclosure information after crossing the 5 per cent limit in several companies.
Sebi investigation found that Arora carried out insider trading in Digital Globalsoft by selling his funds' entire holding of 14.66 lakh (1.46 million) shares in the company before the announcement of the swap ratio.
The probe reveals that Arora had prior information about the swap ratio, which was not in favour of the DGL shareholders, the order said.
Sebi order issued said there is a prima facie case of insider trading against Arora." He being the fund manager at Alliance Capital Mutual Fund and FIIs/sub-accounts of US-based Alliance Capital Management, was responsible for alleged non-disclosures and wrong disclosures under Sebi's regulations.
The order said ACMF, FIIs and sub-accounts of ACM, being persons acting in concert did not make declarations to the respective companies when their stakes crossed the threshold limit of 5 per cent in the case of Balaji Telefilms, Digital Globalsoft, Mastek, Hinduja TMT and United Phosphorous under Sebi's regulations.
In some instances they have made wrongful disclosures, possibly to mislead investors and the public at large.