DNA Money Edit: To acquire or not? Lessons to learn

"Silence as a sign of wisdom cannot be stretched to a point of total silence in the world of securities market," says Securities Appellate Tribunal (SAT) while quashing a penalty of Rs 8 lakh on Emami chairman R S Agarwal by Securities and Exchange Board of India (Sebi) for making a rather casual comment to the media that he was interested in acquiring Amrutanjan, a well-known pain-reliever brand. These are surely golden words in support of financial journalism and underscore the need to maintain a fine balance between serving interest of investors and staying on the right side of securities rules including those governing insider trading.

The stock markets regulator had fined Agarwal under Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market Regulations, 2003, claiming that his statement was made without the approval of Emami's Board and that once the news was out, shares of Amrutanjan had jumped and as a result, he had violated Section 12 (A) (c) of the Sebi Act, apart from the Prohibition of Fraudulent and Unfair Trade Practices rules. In a relief to Agwarwal and possibly all financial journalists, the appellate authority has now turned down that penalty and Sebi's ruling that held a promoter a fraud.

SAT has tamed the hyperactive regulator by asking it to ascertain the motive in the absence of any connecting evidence before claiming that a serious issue of fraud has taken place.