Reference no: EM132555171

Mr. Rajeev Mehta was the Chairman of ABC Bank. The bank was earning fairly well and shareholders were receiving regular dividends. The market price of their shares was performing well. The bank was about to announce taking over the 'AME Bank.' Mr. Rajeev Mehta expected that the market share of their bank would rise once the takeover is announced in the public. Being a part of the bank, Rajeev was not allowed to buy shares of ABC bank. He called one of his wealthy friend Rashid and asked him to invest Rs.5 crores in shares of his bank promising him the capital gains. As expected, the share prices went up by 40% and the market price of Rashid's shares was now 7 crores. He earned a profit of Rs. 2 crores. He gave Rs. 1 crore to Mr. Rajeev Mehta and kept Rs. 1 crore with himself. On regular inspection and by conducting enquiries of the brokers involved, the Securities and Exchange Commission (SECP) was able to detect this irregularity. The SECP imposed a heavy penalty on Rajeev Mehta. In context to the above situation identify the irregularities keeping in view the concepts of corporate governance & Business Ethics and elaborate the functions that were performed by SECP