The Securities and Exchange Board of India (Sebi) has accused Pranav Adani, a senior Adani Group executive and nephew of billionaire Gautam Adani, of sharing unpublished price-sensitive information ahead of the conglomerate’s takeover bid for NDTV in 2022, according to media reports.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 report was first published in the Economic Times.
Pranav Adani or his company are yet to respond to Sebi’s accusations. Sebi, which held a press conference earlier on Wednesday, also did not mention the report.
Last week, Sebi cleared Pranav Adani of insider trading allegations related to Adani Green Energy’s acquisition of SB Energy. In this case too, Pranav Adani was accused, along with his relatives Kunal Shah and Nrupal Shah, of trading on the basis of allegedly price-sensitive information. Sebi has rejected the charges against all of them.
The case
The case focuses on Adani Group’s open offer for a 26% stake in NDTV, announced after trading 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 shares opened 2.5% higher than the previous close and jumped almost 5% by 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, calling it a UPSI until it was released on the exchanges. “The company announcement dated August 23, 2022 is that of UPSI,” Sebi said in its notice. This information, the regulator said, “materially affected the price of NDTV’s script upon its entry into the public domain.”
Later, Sebi launched an investigation into whether certain entities were trading NDTV shares while in possession of price-sensitive information. The investigation period took place between May 2, 2022 and September 15, 2022, covering the pre-UPSI, UPSI and post-announcement phases.
The UPSI period begins when the information exists or is decided internally, even at a preliminary stage, and ends when this information is made public.
Following the investigation, the market regulator reportedly found that Kunal Shah purchased NDTV shares on several occasions during the UPSI period. As of August 8, 2022 alone, its purchases accounted for nearly 9% of the total stock trading volume on the NSE, the report said.
The regulator alleged that Kunal Shah held a net long position of 78,000 shares during the UPSI period, which were later settled after the announcement. Sebi estimates that Kunal Shah’s transactions generated profits of Rs 52.89 lakh. Nrupal Shah and Dhanpal Shah also allegedly made illegal profits of Rs 52.7 lakh and Rs 32.6 lakh, respectively.
Sebi alleged that Kunal, Nrupal and Dhanpal Shah were “related persons” who traded in NDTV shares while in possession of UPSI, the report said, adding that the regulator has initiated arbitration proceedings to determine whether sanctions should be imposed on them for violating insider trading norms.
Pranav Adani allegedly violated provisions prohibiting insiders from sharing unpublished price-sensitive information. His relatives allegedly violated provisions prohibiting insiders from trading listed securities while possessing unpublished price-sensitive information.
