The Securities Appellate Tribunal (SAT) on Thursday quashed the insider trading order against former NDTV promoters Prannoy Roy and Radhika Roy.
The order, issued by the market regulator in 2020, found that the Roys had traded while in possession of price-sensitive information, and directed them to disgorge the unlawful gains, and prohibited them from accessing the securities market for a period of two years.
‘Not price sensitive’
The trades of Prannoy Roy and Radhika Roy were during PSI-6, a period when the company had decided to evaluate options for its reorganisation. SAT held that PSI-6 was not price-sensitive information and, therefore, the charge of insider trading during that period could not be sustained.
“Since we have already held in Quantum Securities that PSI-6 was not 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 observed.
The Roys had also secured pre-trade clearance from the NDTV compliance officer, and the trades were in conformity with the NDTV’s Code of Conduct and the PIT Regulations.
Lack of reasoning
“The ruling has highlighted the need for SEBI to provide reasoned orders dealing with the issues raised by noticees. SAT also reiterated that the Supreme Court’s recent judgement in Abhijit Rajan versus SEBI lays down crucial principles for levelling and examining charges of insider trading,” said Ravi Prakash, Associate Partner, Corporate Professionals.
For some other appellants in the insider trading matter, the order has been quashed and the matter remanded back to SEBI due to the lack of reasoning on the crucial aspect of delay in launching proceedings and aspects of UPSI existence and access, he said.
The market regulator had investigated two separate cases against promoters of NDTV in 2020, one involving loans taken by promoters of NDTV from Vishvapradhan Commercial and the other on insider trading.
In both orders, the regulator had restrained the promoters from accessing the capital market for two years. Earlier this year, SAT overruled the ban in the loan case, stating that the findings and directions are not sustainable.