On October 5, 2023, the Securities and Appellate Tribunal (SAT) made a significant decision to quash the insider trading order that had been issued against former NDTV promoters, Prannoy Roy and Radhika Roy. This order comes as a relief to the promoters who had been previously asked to disgorge more than Rs 16 crore.

The SAT’s ruling was based on its earlier finding that the information surrounding the trades made by Prannoy Roy and Radhika Roy was not considered price-sensitive information. The tribunal’s order clarified, “The trades of Prannoy Roy and Radhika Roy were conducted during PSI-6. In Quantum Securities (Supra), we have already determined that PSI-6 was not considered price-sensitive information, and therefore, the charge of insider trading during that period cannot be upheld.”

PSI-6 pertains to information that the Securities and Exchange Board of India (Sebi) had previously classified as price-sensitive. It revolved around the NDTV board’s decision to explore options for the company’s reorganization, potentially including the demerger or split of the company into news-related and ‘Beyond News’ businesses held through its subsidiary NDTV Networks Plc.

Earlier, on November 27, 2020, Sebi had issued an order requiring both Prannoy Roy and Radhika Roy to ‘disgorge’ over Rs 16.97 crore, along with interest charged at a rate of 6 percent per annum from April 17, 2008. Additionally, they were barred from accessing the securities market and prohibited from engaging in securities-related activities for a period of two years.

The SAT’s decision highlighted that Prannoy Roy and Radhika Roy had obtained pre-trade clearance from NDTV’s Compliance Officer, which was an acknowledged fact in the show-cause notice. Therefore, the trades executed by these individuals were in accordance with NDTV’s Code of Conduct and the PIT Regulations. The tribunal also noted that there was no indication in Sebi’s order that the Compliance Officer had acted improperly when granting permission for these trades during a period when the trading window was closed.

In light of these findings, the SAT ruled that the Sebi order against Prannoy Roy and Radhika Roy could not be upheld.

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