SAT quashes Sebi order against NDTV founders Prannoy Roy, Radhika Roy

The promoters had been asked to disgorge more than Rs 16 crore.

The Securities and Appellate Tribunal (SAT) on October 5 quashed the insider trading order against former NDTV promoters Prannoy Roy and Radhika Roy.

The SAT order referred to its earlier order, which found that the information around which the trades were done was not price-sensitive information.

The tribunal's order stated, "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."

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

On November 27, 2020, the Sebi had passed an order asking both of them to 'disgorge' more than Rs 16.97 crore along with interest charged at the rate of 6 percent per annum from April 17, 2008.

They were also restrained from accessing the securities market and further prohibited them from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of two years.

The SAT order said, "It was urged, that Prannoy Roy and Radhika Roy had sold their shares on April 17, 2008 when the trading window was closed and, therefore, have violated NDTV’s Code of Conduct and the provisions of Regulation 12(2) read with Regulation 12(1) of the PIT Regulations, 1992. In this regard, we find that 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 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 the two entities was in conformity with the NDTVs Code of Conduct and the PIT Regulations. It added that there was no finding in the Sebi 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.

Given these, the tribunal's order said that the Sebi order passed against Prannoy Roy and Radhika Roy cannot be sustained.