SAT quashes Sebi's insider trading order against NDTV founders Prannoy Roy, Radhika Roy in 2020 case

The Securities Appellate Tribunal (SAT) has quashed an insider trading order by capital markets regulator Securities and Exchange Board of India (Sebi) against NDTV's Prannoy Roy and Radhika Roy. In November 2020, the capital markets regulator had barred former NDTV promoters Prannoy Roy and Radhika Roy from the securities market for two years after charging them with insider trading.

Sebi had directed Prannoy and Radhika Roy to disgorge the amount wrongfully gained -- over Rs 16.97 crore -- along with 6 per cent interest per annum. It had also barred seven individuals and entities for insider trading in the shares of the company for a period varying from one to two years.

The Sebi had conducted a probe on NDTV between September 2006 and June 2008 wherein various violations of insider trading regulations were found.

Among the several instances of violation, the Roys were accused of trading on December 26, 2007, by buying in NDTV shares during the UPSI (unpublished price sensitive information) period -- despite being insiders -- as the board decided to evaluate options for its reorganisation including splitting into news related businesses and investments in 'Beyond News' businesses which are currently held through its subsidiary, NDTV Networks Plc.

Sebi noted that Prannoy Roy and Radhika Roy together made a gain of Rs 16.97 crore while indulging in insider trading.

Prannoy Roy was the chairman and full-time director and Radhika Roy was the managing director during the period under investigation and were part of the decision-making chain that had led to the crystallization of the UPSI.

Prannoy Roy and Radhika Roy reportedly sold shares on April 17, 2008, when the trading window for them was closed and made a profit of Rs 16,97,38,335.

By doing so, they violated PIT norms and also acted in contravention of NDTV's code of conduct for prevention of insider trading which prohibited them from trading at least till 24 hours after the information was disclosed to the stock exchanges.

In 2020, then NDTV, which was controlled by Roys, had moved SAT against the Sebi order.

NDTV said Sebi's order against the founders Prannoy Roy and Radhika Roy is based on an inaccurate assessment of facts and that the company will immediately appeal against it.

It further said that the Sebi's ruling will not withstand scrutiny in appeal. "The appeal will be filed immediately," the statement said.

The statement was issued by the lawyers led by Fereshte Sethna, Senior Partner at DMD Advocates, who represent NDTV founders Radhika Roy and Prannoy Roy.

Earlier in 2019, Sebi had barred Prannoy Roy and his wife Radhika Roy from accessing the securities market for a period of two years. It also barred them from holding any management positions in NDTV for two years.

NDTV taken over by the Adani Group

In August 2022, Adani Group said its media unit will buy a majority stake in NDTV. Adani's unit indirectly bought a 29.18 per cent stake in NDTV and then launched an open offer for another 26 per cent stake.

In December 2022, Adani Group gained full control of NDTV after it acquired most of the stake of founders, Prannoy Roy and Radhika Roy, at a premium of almost 17 per cent over the rate it paid to minority shareholders of the firm. On December 30, 2022, AMG Media Networks Ltd (AMNL) acquired a 27.26 per cent stake in NDTV through its subsidiary RRPR Holding Private Limited, granting AMNL a controlling interest of 64.71 per cent in the media company. The Roys still hold a 2.5 per cent stake each in NDTV.

Shares of New Delhi Television Ltd were trading at Rs 212.65, up by 0.31 per cent, at 12.50 PM.