The bank seems to be having serious insider trading offence.
From the article:
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There is no end to negative developments in RBL bank. This insider trading is very serious if they acted on internal news which is not public or disclosed to exchanges.
Disc - Reduced my holdings substantially.
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Hi
Well it seems they did sell. I has shared something on twitter on this a week or so back.
Draw your own conclusions. Dont know why the stock is down 15% or so though.
Rgds
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Difficult to believe 30 employees of different designation/location decided to do insider trades on same day. May just be panic selling. RBL Bank has too large esop program, they should come up with better guidelines, doesnt seem to be helping the company.
Irony is CCD which started it all, is doing extremely well with its assets sales. Dont think even a penny of it will turn NPA!
RBL has around 6000 employees & 30 of them being close to each other & sharing friendly information does not look tough. Investigations may reveal truth but its not easy to rule out straight forward.
Reputation & trust take long time to develop but get lost in fraction of seconds… the damage is huge & could turn irreparable.
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These are not the random employees…look at the designations…few of them at very high positions.
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All these employees are M-team, if a branch manager did that I may believe it was a panic hit. But not when someone like VP, Regional Head does that. They definitely knew what was coming.
Head SME, Head FIG, Head Fex,Derivatives,Head Strategic Projects, Head of Marketing ,Head Agri Mktg,Head Collection Strategy…all are in leadership positions…sitting in HO…it seems to be a collective decision.
Also look at number of stocks with these people. This kind of quantity is given to people at leadership roles.
Disc:Holding on to my investments. 30% loss as of now.
Hi Deepak ,
Thanks for sharing and this is good work . do you do this manually or this is available on some website . could you please share the source.
regards
Trailing FY19 book value was Rs180. Trailing RoE was 12% which will head lower. There was a story around that RBL is the next HDFC Bank. That story is progressively fading BTW. You might want to revisit your investment thesis.
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This insider trade is so serious. To see the senior employees dumping the stock this way, leaves a very bad taste in mouth. These are kind of activities which destroys the investor confidence. Where do you go from here…
Disc - not invested (previously invested & sold position)
If it keep sliding at around 200 will be a good buy
Lets wait what management comes up now
Management clarification on insider trading
On capital adequacy and possible infusion. Could not get whole conversation though
The logic of management to highlight that 25% of employee hold ESOPs and it is a regular activity is too generic a statement Mr. Ahuja can make without getting into details or may be he does not want to. Also, it is important to see if the specific date was an outlier date or it was just like any other day which Mr. Ahuja is claiming. Below is count of unique insiders whose transaction type was “disposal” as per BSE site and overall value in Rs Lakhs.
It is evident that during these 2 days of 30th July and 31st July , the activity on count of sellers was 22x more on a given day than overall average (keeping these 2 days aside for 40 day window) and by value also, it was 2.8x more. So, it cant be brushed aside telling, it is a general case. Now, whether there is intent based causality in these sell transactions with respect to CCD issue or the transactions got triggered due to some other reasons beyond the intent of seller is something management should try to establish. This generic explanation for sure does not go in good taste.
Disc: This is not a buy or sell recommendation. Please do your own research. Hold a position here
Data Source: BSE
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When 25% of your staff have ESOPs , more time is spent on watching the stock price than working.
Having worked in a bank, I know that it is very easy for insiders especially anyone in credit or risk to know the credit status of their clients, such emails are widely circulated among senior management.
Implication for investors: information asymmetry is more acute in banking than anywhere else. Price action is important to note even for fundamental investors especially for small sized banks.
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Can you get similar data for July’18 or July’17? I understand that management wish to say that this activity is common in m/o July.
I am sure that management don’t want to indicate that there is anything wrong but damage is done & seems irreparable until management comes up with concrete steps to punish culprits or prevent similar occurrences.
Why to look at 18,17 unless there is a seasonality in sell behavior (but your have a point, there could be based on how ESOPs get allocated).Still, I think pre 20 day n post day is a good way to overcome those seasonality aspects as seasonality cant be on 1-2 specific days in a given month or quarter. Thats why took pre 20 n post 10 days which is a very strong comparative data point. Also, Please note I am not highlighting this as insider trading.All I am telling his general comment does not go in good taste as it was not a generic day but a specific day but to blame for insider trading , there are deeper questions:
- Do we know all the clause of what is insider trading
2, What is a public information and what is a private information. If someone goes to MCA pays 100 rupee and see charge document , he can find CCD has loans from RBL. So, if CCD promoter goes missing, knowing this is known to public on 30th, will we consider RBL loan to CCD as public information or private information (assuming some of this might be available in AR) - What if employees sold out of fear? As a common man, my understanding of insider trading is knowing what market does not know which means information is not public. How and who will decide what is in public domain and what is not. Not sure if I have answers. So, my only limited point is mentioned in last sentence of previous post “This does not look a generic event for sure but this does not prove any causality of insider trading. however, brushing it aside calling general event is not good as data highlights that and this for sure needs specific management attention to find answers to open questions related to insider trading”
Personally, I do not give much weight to media articles as in good times they will inflate good news and bad times they will shout bad news from roof top and in both processes , they themselves behaving like a lawmaker than highlighting on information and analysis. Lets see if regulator has a view on this . We have not heard from them so far
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