MUMBAI: The Securities & Exchange Board of India (Sebi) has slapped a penalty of Rs 10 million (Rs 1 crore) on Manmohan Shetty for alleged violation of insider trading regulation on sale of shares of Adlabs Films in 2006.

As per Sebi, Shetty, who was the then managing director of Adlabs, sold 10 lakh shares of the firm before the expiry of 24 hours of the outcome of a board meeting was made public. The board of directors of Adlabs on 23 April, 2006 approved a proposal for demerger of the FM radio business of the company in favour of a wholly-owed subsidiary.

Shetty sold his shares on April 24 at an average rate of Rs 402.60 per share before the expiry of the 24-hour period after the board meeting. The closing price of the share on that day was Rs 409.14, but had gone down to Rs 393. According to Sebi, Shetty has been penalised as he violated the code of conduct.

However, Shetty told Sebi that the sale was an inadvertent and technical error on his part, without any malafide intention.