A Vellayan steps aside as Chairman of Murugappa Group Corporate board

In the wake of market regulator Securities and Exchange Board India (SEBI) charging him with insider trading, A. Vellayan has stepped aside from the chairmanship of the Murugappa Group Corporate Board and also of Coromandel International Ltd. and EID Parry India Ltd.

He has chosen to step aside until the matter is resolved, said a release issued by his office.

The SEBI has alleged that Mr. Vellayan had passed on unpublished price-sensitive information pertaining to the acquisition of Sabero Organic Gujarat Ltd. by Coromandel International, a group company, to some individuals, who traded in the shares of Sabero on the basis of that information.

The market regulator has ordered Mr. Vellayan and three others charged with insider trading to surrender the unlawful gains with interest. The SEBI said it had examined events of the period between May 15, 2011 and June 15, 2011, based on complaints. And, it had indicated that it would take further action in the case after completion of the investigation.

“The SEBI order linking Mr. A. Vellayan, Chairman of the Murugappa Group, to trades by two individuals in shares of Sabero Organics Gujarat Ltd., a company that was acquired by Coromandel International Ltd. in May 2011, is based merely on suspicion, and is a far-fetched tenuous conjecture,’’ the release said.

“The only purported link sought to be made by SEBI between Mr. A Vellayan and these transactions is that one Mr. A. R. Murugappan is a distant relative (son of a grandaunt) and had had a property transaction with Mr. A Vellayan way before the Sabero transaction was even thought about. SEBI has jumped to the conclusion that the trades could potentially be attributed to suspected communication of unpublished price sensitive information about the Sabero deal by Mr. A Vellayan to this distant relative. The link drawn in this interim order is not a conclusive finding,’’ the release said.

“Mr. A Vellayan is resolute in defending the serious harm to reputation caused by this order and will take appropriate action as legally advised. He is keen to also demonstrate bona fides and will extend full co-operation to SEBI to complete investigations expeditiously, apart from seeking redress against the premature measures adopted,’’ the release said.

“In keeping with family values and tradition, he has stepped aside from the Chairmanship of the Murugappa Group Corporate Board and of Coromandel International Ltd. and EID Parry India Ltd. until this matter is resolved,’’ it further added.