SAT Quashes SEBI’s Insider-Trading Order Against NDTV Founders Prannoy Roy and Radhika Roy

SAT Quashes SEBI’s Insider-Trading Order Against NDTV Founders Prannoy Roy and Radhika Roy

States that they carried out the operations in conformity with the company’s Code of Conduct and PIT Regulations

The Securities and Appellate Tribunal (SAT) has quashed the insider trading order against former NDTV promoters Prannoy Roy and Radhika Roy.

The order stated, "The trades of Prannoy Roy and Radhika Roy were 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."

PSI-6 is a reference to information considered price sensitive by the Securities and Exchange Board of India (SEBI). It was about NDTV’s board deciding to evaluate options for reorganization, which could include de-merger/split of the company into news-related businesses and investments in 'Beyond News' businesses, currently held through its subsidiary NDTV Networks Plc.

In November 2020, SEBI passed an order asking both to 'disgorge' more than Rs.16.97 crores along with interest charged at the rate of 6 percent per annum from 17 April 2008. They were restrained from accessing the securities market and prohibited from buying, selling, or dealing in securities, directly or indirectly, or being associated with the securities market in any manner, for two years.

The tribunal’s order read, "It was urged, that Prannoy Roy and Radhika Roy had sold their shares on 17 April 2008 when the trading window was closed and, therefore, violated NDTV’s Code of Conduct and the provisions of Regulation 12(2) read with Regulation 12(1) of the Prohibition of Insider Trading Regulations, 1992. Since we have already held in Quantum Securities that PSI-6 was not a price-sensitive information and that the appellants Prannoy Roy and Radhika Roy are not insiders, the question of violating the NDTV’s Code of Conduct for trading during the window closure period becomes immaterial."

The tribunal stated that the Roys secured pre-trade clearance from the Compliance Officer of NDTV, an admitted fact in the show-cause notice. Therefore, the trades executed by them were in conformity with NDTV’s Code of Conduct and PIT Regulations. There was no proof in the SEBI’s order that the Compliance Office acted improperly in granting permission to the two entities to sell during the period when the trading window was closed.

Thus, the bench held that SEBI’s order passed against the Roys could not be sustained.