Poonwalla Fincorp managing director Abhay Bhutada has resigned from the non banking finance company (NBFC) a day after Securities and Exchange Board of India (SEBI) barred him from dealing in securities, for allegedly using price sensitive information in trading in the shares of before it was acquired by the Poonawalla Group.

Bhutada will step down with immediate effect after the company’s board accepted his Bhutada’s resignation, the company said in a statement to the exchanges. Group CEO Vijay Deshwal is likely to continue to run the operations of the company. In its order on Wednesday, SEBI said

Sebi said its surveillance alert system had detected suspicious trading pattern in the shares of Magma Fincorp around the announcement of Magma Fincorp’s acquisition by Rising Sun Holding Private Limited (RSHPL), a company controlled by Poonawalla Group, on February 10,2021.

On analysis of the alerts for the announcement, a group of connected entities were observed to have taken long position in the shares. Subsequently, these entities had squared off the long positions thereby generating substantial profits. The regulator said Bhutada was the contact person for the deal from the very beginning of the discussion and has been involved in the matter throughout the UPSI (unpublished price sensitive information) period.

Sebi’s probe, based on call data records and bank statement analysis revealed that Abhay Bhutada had passed on the inside information to his connected entities — Abhijit Pawar, Saumil Shah and Rakesh Bhojgadhiya, who in turn passed on this information to Amit Agrawal.

Seven people besides Bhutada have been barred from trading and their bank accounts have been impounded to the extent of Rs 13.58 crores. Earlier in the day in a notice to the stock exchanges Poonwalla Fincorp had said Bhutada had denied the allegations.

“With respect to above subject i would like to clarify as follows. 1. I am denying all allegations mentioned against me in the order. 2. I have not shared any unpublished price sensitive information (UPSI) directly or indirectly to the entities mentioned in the order except the official discussion with entity no 2 who was working as an advisor for the Acquisition transaction. 3. I have not received any kind of financial benefit directly or indirectly from the entities mentioned in the order. 4. My transactions with the entities mentioned in the order are genuine business transaction and legitimate in nature including few of the past transaction,” Bhutada said in a letter addressed to board of directors.

He also said that he will tak appropriate legal recourse.

Poonawalla shares fell 5% on Thursday to Rs 172 a piece as investors sold the company’s shares after the SEBI order on Wednesday night. Bhutada had set an ambitious target to increase the company’s loan assets by three times in the next four years.