The stock of Polaris Financial Technology (erstwhile Polaris Software Lab) crashed 5.8 per cent to Rs 126.25 on the BSE after the SEBI accused its Chief Executive Officer Arun Jain of insider trading and barred him from participating in the securities markets for two years.

During the initial trading it touched a low of Rs 122.65. Trading volumes also jumped to 5.83 lakh shares on the BSE against the two-week average of 1.13 lakh shares. On the NSE, 19 lakh shares exchanged hands against its two-week average of 7.56 lakh shares.

SEBI in its findings said Polaris Holding Private Ltd, a promoter group company, had sold 15,080 shares of Polaris Software between August 23, 2000, and September 19, 2000, through Chennai-based broker Allsec Securities.

SEBI found that Jain had, at the time, been privy to unpublished price-sensitive information that Polaris Software had called off its proposed acquisition of a US-based company, Data Inc. Though the acquisition was called off at end August, the information was not given to the bourses until September 30, 2000. SEBI found that the trading (in 15,080 shares) was motivated on the basis of the price-sensitive information in Jain’s possession, and he was not able to prove otherwise.

After the information was made public, the share price of Polaris Software, which had closed at Rs 595 on September 29, fell to Rs 390 on October 23, 2000. This case was settled through the consent mechanism (without admission or denial of guilt and on payment of consent charges of Rs 7 lakh) on July 21, 2008.

However, SEBI had, in 2005, considered proceeding against Jain under Sections 11 and 11B of the SEBI Act (that empowers the regulator to issue directions in the interest of investors). The order comes into effect immediately.

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