NDTV Insider Trading Appeal: SAT Asks Prannoy and Radhika Roy To Deposit 50% of Disgorged Amount in 4 Weeks

SAT Asks Prannoy and Radhika Roy To Deposit 50% of Disgorged Amount in 4 Weeks The Securities Appellate Tribunal (SAT) while directing Securities and Exchange Board of India (SEBI) to file a reply, has asked New Delhi Television Limited (NDTV) promoters Dr Prannoy Roy and Radhika Roy to deposit 50% of the disgorged amount with SEBI in four weeks. In November 2020, SK Mohanty, whole-time member (WTM) of SEBI has asked Dr Roy and his wife Radhika to "jointly or severally, disgorge the amount of wrongful gain of Rs16.970000000 along with an interest, made for a transaction in December 2007 and April 2008." Both Dr Roy and Ms Roy approached SAT against the SEBI order. One of the contentions which arise for the SAT bench comprising justice Tarun Agarwala, Dr CKG Nair and justice MT Joshi for consideration was whether there has been an undue delay in the initiating proceedings when transactions were made on the stock exchange platform. "Further whether the valuation pertaining to the reorganisation of the company as disclosed on April 16, 2008 which amounts to a deemed price sensitive information under SEBI (Prohibition of Insider Trading) Regulations, 1992 as it amounts to changes in policy, plans and operation of the company," the tribunal noted. While asking SEBI to file its reply in three weeks, the SAT, during the online hearing, allowed the Roys to file rejoinder one week after that. While Vikram Chandra, Ishwari Prasad Bajpai and Saurav Banerjee are barred from markets for one year, the rest are restrained from markets for two years. Mr Dutt has already obtained a stay on the SEBI action from SAT. In his orders, Mr Mohanty, WTM of SEBI had mentioned, "Typically, insider traders get an unfair advantage over people with whom they engage in securities transactions and such trades executed by the insiders are, therefore, wrong on grounds of justice and equity. The insider information is available to the insiders on account of their important corporate hierarchical position. Any fiduciary holds a position in trust for others. 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." Interestingly, there has been a kind of war going on between the Roys of NDTV and Sanjay Dutt, who had worked as a consultant with the group from 2006 to 2008. In June 2013, Mr Dutt had alleged that chairman Dr Roy received irregular promoter funding to the tune of a massive Rs3750000000 by pledging NDTV shares which, according to him, is against the Reserve Bank of India (RBI) rules. The loan was made to a company called RRPR Holdings Private Limited in October 2008 against the pledge of NDTV shares. Also, in the case of Prenita Dutt’s shares there is an allegation of insider trading despite having incurred a loss. Read Allegations of NDTV’s Many Shenanigans ) NDTV had accused Mr Dutt as holding a 'grudge' against NDTV and he had ‘misused’ and ‘distorted’ confidential information obtained as a consultant to level charges against the company in letters to various regulators as well as to NDTV’s board of directors. ( Earlier in June 2019, SEBI, the market regulator, acting on a complaint filed by Quantum Securities in 2016-17, had prohibited NDTV’s famous promoters, Dr Roy and his wife Radhika and their investment company RRPR Holding Private Limited from markets for two years. SEBI also restricted the Roys from holding any post holding or occupying position as director or any key managerial personnel in NDTV for two years. The Roys were also barred from holding similar posts in other listed company for one year.