The Securities and Exchange Board of India (SEBI), barred NDTV promoters Prannoy and Radhika Roy from dealing in the securities market for the alleged insider trading that occurred twelve years ago while the company denied the allegation.
SEBI directed both to regorge all the illegal gains amounting to over Rs 16.97 crore rupees. NDTV denied the charges, saying that it will immediately appeal against the order issued by SEBI.
QUOTING FROM THE ORDER ISSUED BY SEBI.
"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 an unlawful gain, such insiders are required to forgo the gain amassed by such transactions.
SEBI, therefore, passed the following orders:
Mr. Prannoy Roy and Mrs. Radhika Roy shall, jointly or singularly, repay wrongfully gained wealth which amounted ? 16,97,38,335 as said in show cause notice issued, along with the rate of 6% yearly from17th of Apil 2008, till the date of actual payment of amount together with interest, within 45 days from the date this order comes into force. Mr. Prannoy Roy and Mrs. Radhika Roy shall be barred from accessing the stock market and further restricted from buying, selling, and even dealing in securities, directly or indirectly, or being related to the stock market in any manner possible, whatsoever, for a period of two years from now.
The order also stated:
"It is clarified that in the amount of restraining the present holding of securities, including the units of mutual funds shall remain under freeze in respect of the aforesaid Noticees."
The order was passed after a thorough investigation which was conducted by SEBI between September 2006 and June 2008, wherein various instances of wrongful insider trading were found.
Prannoy and Radhika Roy were purported to have gained a profit of about Rs. 17 crore rupees while indulging in trading in shares of NDTV while in possession of unpublished price sensitive information (UPSI) related to the corporate.
The acts of Roys were found to be in violation 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.