The Securities and Exchange Board of India (Sebi) had barred NDTV promoters Prannoy and Radhika Roy from dealing in the securities market for alleged insider trading they indulged in 2008. Sebi has directed the Roys to disgorge illegal gains of over Rs 16.97 crore.
NDTV had denied the charges. It said that it would appeal immediately against the ruling.
The order passed by SEBI reads:
“If the persons like the Noticees, who are obligated to observe fiduciary duties while exercising their powers fail to do so and instead use their position to their own advantage pecuniary or otherwise, it constitutes a fraud perpetrated on the common shareholders whose trust reposed in them has been blatantly breached. It is, therefore, of paramount importance that trading by the insiders is monitored and regulated, especially when they are in possession of UPSI. Wherever such trading results in accrual of unlawful gain, such insiders are required to forgo such gain. Considering the foregoing, the following two issues are to be decided:
(a) Direction to disgorge an amount equivalent to the wrongful gains made on account of insider trading in the scrip of NDTV along with interest thereon;
(b) Direction to refrain from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.”
The order states further:
“It is clarified that during the period of restrain the existing holding of securities, including the units of mutual funds shall remain under freeze in respect of the aforesaid Noticees.”
Sebi issued the direction after probing the NDTV promoters between September 2006 and June 2008. The regulator found various violations of insider trading regulations.
Prannoy and Radhika Roy were alleged to have profits of almost Rs 17 crore while indulging in insider trading in shares of NDTV while in possession of unpublished price sensitive information (UPSI) related to the proposed reorganisation of the company.
The Roys were found to be in contravention of Regulations 3(i), 4, and 12 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 read with Section 12A(d) and (e) of the SEBI Act, 1992.
Last year, the CBI had booked the NDTV promoters and others for allegedly violating Foreign Direct Investment (FDI) rules in a 2007-09 investment, a charge that the media company had denied too.
Besides Prannoy and Radhika Roy, the agency registered an FIR against then CEO Vikramaditya (Vikram) Chandra as well as unidentified government officials on charges of criminal conspiracy, cheating and corruption