Sebi alleges insider trading by Pranav Adani in NDTV open offer: Reports

The Securities and Exchange Board of India (Sebi) has alleged Pranav Adani, a senior Adani Group executive and nephew of billionaire Gautam Adani, of sharing unpublished price-sensitive information ahead of the conglomerate's 2022 takeover bid for NDTV, according to news reports. Pranav Adani allegedly shared the information with his brothers-in-law, violating insider trading norms set by the market regulator. 

Sebi reportedly issued a show-cause notice to Pranav Adani on October 15. The notice also names his brothers-in-law, Kunal and Nrupal Shah, and their father, Dhanpal Shah. The news report first appeared in the Economic Times.

Pranav Adani or his company has not responded to Sebi's charges so far. Sebi, which held a press conference earlier on Wednesday, also did not mention anything about the report.

Last week, Sebi cleared Pranav Adani of insider trading allegations related to Adani Green Energy's acquisition of SB Energy. In that case, too, Pranav Adani was accused along with the same relatives-Kunal Shah and Nrupal Shah-of trading based on alleged price-sensitive information. Sebi dismissed the charges against all of them.

The case 

The case centres on the Adani Group's open offer for a 26% stake in NDTV, announced after market hours on August 23, 2022. The offer involved the purchase of 16.76 million shares at Rs 294 apiece, valuing the transaction at Rs 492.81 crore. However, when trading resumed on August 24, 2022, NDTV's shares opened 2.5 per cent higher from the previous close and jumped nearly 5% at the end of the day, according to documents reviewed by ET. 

According to the regulator, the announcement was made after the close of trading on a market day, qualifying it as UPSI until it was disseminated through the exchanges. "The corporate announcement of August 23, 2022, is UPSI," Sebi was quoted as saying in its notice. This information, the regulator said, "materially affected the price of the scrip of NDTV upon coming into the public domain."

Later, Sebi began a probe to examine whether certain entities traded NDTV shares while in possession of price-sensitive information. The investigation period was between May 2, 2022, and September 15, 2022, covering the pre-UPSI, UPSI and post-announcement phases.

The UPSI period starts when information comes into existence or is decided internally, even at a preliminary stage, and ends when that information is made generally available to the public.

Following the probe, the market regulator reportedly found that Kunal Shah allegedly bought NDTV shares on multiple occasions during the UPSI period. On August 8, 2022, alone, his purchases accounted for nearly 9% of the total trading volume in the stock on the NSE, the report said.  

The regulator alleged that Kunal Shah had a net buy position of 78,000 shares during the UPSI period, which were later squared off after the announcement. Sebi estimates that Kunal Shah's trades generated profits of Rs 52.89 lakh. Nrupal Shah and Dhanpal Shah also allegedly made unlawful profits of Rs 52.7 lakh and Rs 32.6 lakh, respectively.

Sebi has alleged that Kunal, Nrupal and Dhanpal Shah were "connected persons" who traded in NDTV shares while in possession of UPSI, the report said, adding that the regulator has initiated adjudication proceedings to determine whether penalties should be imposed on them for violating insider trading norms.

Pranav Adani is alleged to have violated provisions that bar insiders from sharing unpublished price-sensitive information. His relatives are alleged to have violated provisions that prohibit insiders from trading listed securities while possessing unpublished price-sensitive information.