SEBI Accuses Pranav Adani of Insider Trading in NDTV Acquisition

Insider Trading Allegations Against Pranav Adani

The Securities and Exchange Board of India (SEBI) has raised allegations against Pranav Adani, the nephew of prominent businessman Gautam Adani, for purportedly breaching insider trading regulations. He is accused of disclosing sensitive information regarding the Adani Group's offer to acquire shares of NDTV to his brothers-in-law, as reported by a leading financial publication.

On October 15, SEBI issued a show cause notice to Pranav Adani, along with his brothers-in-law Kunal and Nrupal Shah, and his father-in-law Dhanpal Shah. Kunal and Nrupal are related to Pranav through his uncles, Vasant and Vinod Adani.

Pranav Adani serves as a director at Adani Enterprises, the flagship entity of the conglomerate led by Gautam Adani.

According to the notice, communications between Pranav Adani and the Shahs indicated frequent discussions during the period when the unpublished price-sensitive information (UPSI) was relevant, as noted by the financial publication.

SEBI's regulations strictly forbid insiders from sharing unpublished price-sensitive information with external parties. Engaging in trading based on non-public sensitive information constitutes insider trading, which is a criminal offense.

The Adani Group secured a majority stake in NDTV on December 30, 2022, after acquiring a 27.26% equity interest from co-founders Prannoy Roy and Radhika Roy.

Earlier, on August 23, 2022, JM Financial, the manager for the Adani Group's open offer, notified stock exchanges about a public announcement regarding NDTV after trading had concluded for the day.

This announcement indicated that Vishvapradhan Commercial Private Limited, along with AMG Media Networks Limited and Adani Enterprises, intended to acquire up to 26% of NDTV's share capital from public shareholders.

SEBI stated that since the announcement was made post-market hours, it remained unpublished price-sensitive information until it was officially communicated through stock exchanges, as reported.

When trading resumed on August 24, 2022, NDTV's shares surged, opening approximately 2.5% higher than the previous day's close and ultimately rising nearly 5% on the National Stock Exchange.

SEBI noted that the announcement on August 23, 2022, significantly impacted NDTV's stock price once it became public.

During the UPSI period, Kunal Shah reportedly purchased NDTV shares multiple times, with some transactions occurring in the weeks leading up to JM Financial's announcement.

On August 8, 2022, his purchases represented nearly 9% of the total trading volume for NDTV shares on the National Stock Exchange, a figure deemed significant by the regulator.

SEBI claimed that Kunal Shah's trades resulted in profits of Rs 52.89 lakh, while Nrupal and Dhanpal Shah also gained unlawful profits of Rs 52.7 lakh and Rs 32.6 lakh, respectively.

The regulatory authority has commenced proceedings to ascertain whether penalties should be imposed on Pranav Adani, Kunal, Nrupal, and Dhanpal Shah for their alleged violations of insider trading laws.

Inquiries sent to SEBI, the Adani Group, and the Shahs by the financial publication seeking their responses went unanswered.

Details of Adani Group's NDTV Stake Acquisition

On August 23, AMG Media Networks Limited, a wholly-owned subsidiary of Adani Enterprises, acquired 100% of the equity stakes in Vishvapradhan Commercial Private Limited for Rs 113.74 crore.

Later that month, the Adani Group announced plans to acquire a 29.18% stake in NDTV through Vishvapradhan Commercial Private Limited. NDTV subsequently stated that the takeover occurred without the consent or prior notice to Radhika Roy and Prannoy Roy.

This acquisition was facilitated by a loan of Rs 403.85 crore that Vishvapradhan Commercial Private Limited extended to NDTV in 2009.

Under the loan agreement, the company retained the right to convert the loan into equity shares, a right it exercised following its acquisition by the Adani Group.