SEBI chairman D R Mehta said that the order was still being examined. He declined to comment on the future course of action SEBI would adopt. Sources however said that given the sensitive nature of the case there is no reason to believe why the regulator would not go into appeal against the order.SEBI sources pointed out that information regarding the merger was not public as the HLL top brass had all along denied the various news reports that had appeared on the subject. "The chairman of the company himself wason record denying reports of an impending merger when news stories on the subject were hitting the stands. It is therefore incorrect to presume that the information was in the public domain," said a SEBI source. ``The case is an extremely sensitive one and we have worked very hard on it and hence we will in all probability be going to next authority which is the High Court,'' said a source.

The HLL case was supposed to be a test case for the insider trading rules. ``Rules such as these are designed to ensure the smooth functioning of the capital markets and the body that has been entrusted with its implementation is SEBI,'' said a corporate lawyer. ``SEBI should be the final authority to decide and the courts should be the last resort for these companies and not bureaucrats in the ministry of finance. If companies that are being investigated by SEBI and face prosecution keep running to the finance ministry officials then there is no real point to having insider trading rules or a capital market regulatorfor that matter,'' he said.

MoF raps UTI for professing ignorance

NEW DELHI: The appellate authority has pulled up the Unit Trust of India (UTI) for its ignorance about the widely speculated merger of the Hindustan Lever Ltd with the Brook Bond Lipton India Ltd (BBLIL). The judgment of the authority pointed out, "It is difficult to see how an investor like UTI which has the wherewithal of market research and analysis to advise it in its market decisions was not aware of the press reports and can claim total ignorance of impending merger of HLL and BBLIL."

Quoting SEBI's order, the judgment states that the chief general manager of UTI when asked whether he was aware from whatever source, that BBLIL might be merged with HLL, he replied that he was not at all aware of any such proposal. The judgment pointed out that in the face of the large number of press reports in that period, there were strong reasons to believe that the impending merger, though not formally acknowledged or published was in onesense generally known and UTI's denial of knowledge could not be implied to mean that the market in general had no information in this regard.

The authority also pulled up the UTI for not approaching the Sebi in the first instance soon after it felt that HLL, because of insider trading, had gained an unfair price advantage in the purchase of securities of BBLIL from UTI.

According to the authority, "It's decision to file an appeal on the quantum of compensation after Sebi had suo-moto awarded compensation to it, appears to be an after-thought." Since the authority has held that Sebi's order to award compensation to the UTI lacks in jurisdiction, it did not pass any separate order on the appeal filed by the UTI.