ppt on HLL scam

2.  HUL- formerly known as HLL is India’s largest
consumer products company with an annual turn over of Rs.
13,000 Crores(2007)
 Brooke Bond- is a brand-name of tea owned Company by
Unilever,formerly an independent manufacturer in the United
Kingdom, known for its PG Tips brand and its Brooke Bond
tea cards

3.  Insider trading is buying and selling of securities by the
insider of a company who has price sensitive information
about the company.
 It can be both legal as well as illegal.
 Having special knowledge is unfair to other investors who are
oblivious to any such information

4.  Case analyzes the charges of insider trading by SEBI against
the merger of HLL and BBLIL
 Controversy - Illegal purchase of BBLIL‟s 8 Lakhs shares by
HLL, prior to public announcement of their merger.
 SEBI: suspected insider trading and conducted enquiries.
SEBI issued a show cause notice to HLL

5.  HLL purchased 0.8 million shares of BBLIL from UTI at
Rs.350.35 per share. Transaction took place on March 25,
1996.
 On 19 April 1996, HLL notified the stock exchange of its
proposal to merge with BBLIL.
 A day after the announcement of the merger, BBLIL scrip
quoted@ Rs. 405 leading to a gain of 4.35 Crores for HLL.

6.  August 4, 1997, SEBI issued a show cause notice to HLL
claiming that there was prima facie evidence of the company
indulging in insider trading.
 Alleged HLL of using price sensitive information prior to its
merger with BBLIL

7.  HLL(primary party) did not played an
insider- trading role because it was one
of the parties to the merger itself & not
merely because of its connection to
BBLIL.
 HLL said before transaction, the merger
was the subject of wide market & media
speculation. And after the formal
announcement, press reports highlighted
the fact that the merger was no surprise.

8.  HLL didn’t had any intension to make
profit or loss by merging they just wanted
to strengthen Unilivers shareholdings. So
after the merger the company
cancelled its BBLIL shareholding

9.  SEBI unable to justify prosecutions of
applicants.
 There is no reply from SEBI when ministry
asked court to define clearly whether SEBI
has the claimed powers to adjudicate a matter
for prosecution.
 SEBI’S RULING SUFFERED FROM
“PROCEDURAL LAPSES” and that it used
powers beyond its juridistiction

10.  Generally it is difficult to determine whether there exists a case
of insider trading.
 Merger definitely price sensitive information.
 HLL depleted its reserves for one specific shareholder at the
expense of other share holders- violation of corporate
governance
 After these mergers, it was clear that HLL wanted to follow in
the footsteps of Unilever, its global parent, in India. As a result
of the relaxation of controls after liberalization, the HLL group
could operate in India in much the same way as Unilever did
globally.

11. PRESENTED BY:-
ARAVIND
HIMANI
KENNY
NEETU
DEEKSHA