The Securities and Exchange Board of India on Wednesday said it had found former Tata Finance Ltd director J E Talaulicar guilty of insider trading.

In an order, Sebi director T M Nagarajan ruled that Talaulicar was an insider and that he dealt in TFL equity on the basis of unpublished price sensitive information. Consequently, Sebi has barred him from dealing in securities for five years.

Sebi's investigations have found that Talaulicar, who was also chairman of Niskalp Investment and Trading Co, a TFL subsidiary at that time, had indulged in insider trading in TFL shares before the company's rights issue in March 2001.

The investigations revolved around the sale of 100,000 shares on Talaulicar's own account in March 2001. He was also investigated for allegedly back-dating the records so show for the record that the sale was made in September 2002 when the prices were higher.

Sebi's investigations revealed that the transaction was funded by NITC.

Further, the broker's contract note of September 6, 2001 recorded the sale at Rs 69 a share, while the market price when the shares were actually sold in March was around Rs 35. The cheques for the sale proceeds, however, were dated March 30, 2001.

This led to the belief that the sale of shares took place only in March and not in September as earlier believed. Talaulicar subsequently resigned from the boards of Tata Finance and its erstwhile subsidiary Nishkalp Investment.

Sebi's order directed Talaulikar to "dissociate himself from the securities market," and that "he shall not deal in securities henceforth for a period of 5years."

"Based on study of the facts and circumstances of the case and the arguments put forward by Talaulicar, I have reached the conclusion that Talaulicar was an insider and that he dealt in the equity shares of TFL on the basis of unpublished price sensitive information," the 36-page order said.

Sebi said that transfer of NITCL's funds to the concerned brokers for the Talaulicar's personal benefit is a matter outside the scope of Sebi's regulations.