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SEBI's investigation had uncovered insider trading by Sanjay Dutt and associated entities in NDTV's stock. Additionally, it revealed that Prannoy Roy, Radhika Roy, the Group CEO, Senior Advisor, Executive Director, and Director of Finance of NDTV had also engaged in insider trading during that period
The Securities Appellate Tribunal (SAT) has set aside the Securities Exchange Board of India's (SEBI) order, which had previously found NDTV promoters Pranay Roy and Radhika Roy guilty of violating SEBI (Prohibition of Insider Trading) Regulations 2015.
In its decision dated October 5, a division bench of SAT, consisting of Presiding Officer Justice Tarun Agarwala and Technical Member Meera Swarup, determined that the trades conducted by Pranay Roy and Radhika Roy were not related to unpublished price-sensitive information.
In July 2013, December 2013, and January 2014, SEBI received complaints alleging insider trading in NDTV securities by Sanjay Dutt and other entities from September 2006 to June 2008.
SEBI's investigation uncovered insider trading by Sanjay Dutt and associated entities in NDTV's stock. Additionally, it revealed that Prannoy Roy, and Radhika Roy, the Group CEO, Senior Advisor, Executive Director, and Director of Finance of NDTV had also engaged in insider trading during that period.
The investigation identified six instances of unpublished price-sensitive information being used for these trades.
Consequently, the Whole Time Member of SEBI directed these individuals to collectively and individually disgorge Rs. 2.2 Crores, along with 6% per annum interest, and imposed a two-year ban on their access to the securities market.
Several individuals found guilty by SEBI filed appeals, and SAT subsequently overturned SEBI's order. SAT determined that PSI-6 should not be classified as price-sensitive information. Consequently, entities involved in trading during the PSI-6 period could not be held responsible for violating the PIT Regulations since they were not considered insiders.
Given the tribunal's ruling that PSI-6 was not price-sensitive information, SAT allowed the appeals filed by the Roys.
“The trades of Prannoy Roy and Radhika Roy is during PSI-6. In Quantum Securities (Supra) we have already held that PSI-6 was not a price sensitive information and, therefore, the charge of insider trading during that period cannot be sustained. The matter of Prannoy Roy and Radhika Roy is thus squarely covered by the decision of this Tribunal in Quantum Securities,” the order reads.
The SAT further recorded that the Roys had secured pre-trade clearance and had not violated the NDTV Code of Conduct.
“We find that Prannoy Roy and Radhika Roy had secured pre-trade clearance from the Compliance Officer of NDTV which is an admitted fact in the show cause notice and, therefore, the trades executed by these two entities was in conformity with the NDTVs Code of Conduct and the PIT Regulations. There is no finding in the impugned order to the effect that the Compliance Office had acted improperly in granting permission to these two entities to sell during the period when the trading window was closed,” the SAT said.
Senior Advocate Darius Khambata and Advocates Fereshte Sethna, Abhishek Tilak, Ameya Pant, Mohit Tiwari, Karan Rukhana and Vidhi Shah appeared for the Pranay Roy.
Senior Advocate Gaurav Joshi along with Mihir Mody and Arnav Misra, Advocates from K. Ashar & Co. appeared for SEBI.
Advocate Manish Chhangani along with Advocates Sumit Yadav, Abhay Chauhan and Atul Kumar Agrawal appeared for NSE
Case title: Dr Pranay Roy vs SEBI & Ors.
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