SAT dismisses Sebi's order against Prannoy Roy, Radhika Roy in insider trading case

The Securities Appellate Tribunal (SAT) on Thursday quashed a Sebi order that barred NDTV founders Prannoy Roy and Radhika Roy from the securities market for two years in an insider trading case.

However, the appellate tribunal partly set aside an order against Vikramaditya Chandra, the group's chief executive officer during the relevant period, and remitted the matter back to Sebi to decide the issue.

It further said that trades executed by Chandra during PSI-3 (price-sensitive information) are required to be reconsidered, according to the order passed by SAT.

PSI-3 pertains to the company signing an agreement with a venture capital fund Com Ventures VI, L.P. for investment of USD 20 million in NDTV Network Plc's non-news businesses.

In November 2020, Sebi prohibited Roys from the securities market for two years and also directed them to disgorge illegal gains of more than Rs 16.97 crore for indulging in the insider trading case.

Besides, the watchdog restrained seven individuals and entities from insider trading in the shares of the company for a period varying from one to two years. Also, some of them have been asked to disgorge illegal gains made from trading in the shares when they were in possession of Unpublished Price Sensitive Information (UPSI).

Further, Chandra was asked to disgorge Rs 6.67 lakh in illegal gains.

The directions followed a probe conducted by the markets regulator between September 2006 and June 2008 wherein violations of insider trading regulations were found. The investigation revealed that NDTV had filed six price-sensitive information for disclosure during the investigation period.

In its order, Sebi noted that Prannoy Roy and his wife Radhika together made a gain of Rs 16.97 crore while indulging in insider trading in the shares of New Delhi Television Ltd (NDTV) while in possession of UPSI relating to the proposed reorganization of the company.

Prannoy Roy was the chairman and whole time director and Radhika Roy was the managing director during the period under investigation.

Sebi stated that Roys had sold their shares on April 17, 2008, when the trading window was closed and, therefore, violated NDTV’s Code of Conduct and the provisions of insider trading rules.

While dismissing the Sebi's order, SAT noted that information about the reorganisation of the company was not price sensitive information, and Prannoy Roy and Radhika Roy are not insiders.

Prannoy Roy and Radhika Roy had secured pre-trade clearance from the Compliance Officer of NDTV and therefore, the trades executed by these two individuals were in conformity with the NDTV Code of Conduct and the PIT (Prohibition of Insider Trading) Regulations, the tribunal said.

"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," a bench consisting of Justice Tarun Agarwala and presiding officer Meera Swarup said in their order passed on Thursday.

Consequently, the appellate tribunal said that 'the impugned order passed by the WTM (Whole Time Member) against Prannoy Roy and Radhika Roy cannot be sustained'.

In November 2022, Prannoy Roy and Radhika Roy resigned as the directors of promoter group vehicle RRPR Holding Private Limited.

RRPR, which was acquired by the Adani Group, held a 29.18 per cent stake in the news channel at the time.

As of the June quarter, Roys held a 2.5 per cent stake each in NDTV, shareholding data with the BSE showed.