HLL (Hindustan Unilever Limited) purchased shares of Brooke Bond Lipton India Limited (BBLIL) prior to publicly announcing their merger. The Securities and Exchange Board of India (SEBI) suspected insider trading and issued a notice to HLL. HLL claimed they did not intend to profit from the transaction and cancelled the BBLIL shares after the merger to strengthen Unilever's shareholdings. SEBI was unable to prove their case for prosecution and their ruling suffered from procedural lapses and exceeded their jurisdiction. The merger was price sensitive information but HLL argued it was widely speculated on before the formal announcement. Ultimately, it was unclear if insider trading occurred but the transaction violated principles of

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