The Securities and Exchange Board of India (Sebi) has charged Pranav Adani, a senior Adani Group executive and nephew of billionaire Gautam Adani, with sharing unpublished price-sensitive information ahead of the conglomerate’s 2022 takeover bid for NDTV, according to news reports. Pranav Adani allegedly shared the information with his brothers-in-law, violating insider trading rules set by the market regulator.

Sebi reportedly issued a show cause notice to Pranav Adani on October 15. The notice also names his brothers-in-law, Kunal and Nrupal Shah, and his father, Dhanpal Shah. The story first appeared in the Economic Times.

Neither Pranav Adani nor his company has so far responded to Sebi’s charges. Sebi, which held a press conference earlier on Wednesday, also did not mention anything about the report.

Last week, Sebi cleared Pranav Adani of insider trading allegations related to Adani Green Energy’s takeover of SB Energy. In this case, too, Pranav Adani was accused along with the same family members – Kunal Shah and Nrupal Shah – of trading based on alleged price-sensitive information. Sebi dismissed the charges against all of them.

the case

The case centers on Adani Group’s open offer for a 26% stake in NDTV, announced after market hours on August 23, 2022. The offer involved the purchase of 16.76 million shares at Rs 294 each, valuing the transaction at Rs 492.81 crore. However, when trading resumed on August 24, 2022, NDTV shares opened 2.5% higher than the previous close and rose nearly 5% by the end of the day, according to documents reviewed by ET.

According to the regulator, the announcement was made after the close of trading on a market day, qualifying it as a UPSI until it was disseminated across exchanges. “The corporate announcement on August 23, 2022 is UPSI,” Sebi said in its notice. This information, the regulator said, “materially affected the scrip price of NDTV when it came into the public domain”.

Sebi later initiated an investigation to examine whether certain entities traded in NDTV shares while in possession of price-sensitive information. The research period was between May 2, 2022 and September 15, 2022, covering the pre-UPSI, UPSI and post-announcement phases.

The UPSI period begins when the information comes into existence or is decided internally, even at a preliminary stage, and ends when that information is made generally available to the public.

After investigation, the market regulator found that Kunal Shah allegedly bought shares of NDTV on several occasions during the UPSI period. On August 8, 2022 alone, their purchases accounted for nearly 9% of the total trading volume of NSE stocks, the report said.

The regulator alleged that Kunal Shah had a net long position of 78,000 shares during the UPSI period, which then squared after the announcement. Sebi estimates that Kunal Shah’s operations generated profits of Rs 52.89 lakh. Nrupal Shah and Dhanpal Shah also allegedly made illegal profits of Rs 52.7 lakh and Rs 32.6 lakh respectively.

Sebi has alleged that Kunal, Nrupal and Dhanpal Shah were “connected persons” who traded in NDTV shares while they were owned by UPSI, the report said, adding that the regulator has initiated adjudication proceedings to determine whether they should be penalized for violating insider trading rules.

Pranav Adani is alleged to have violated provisions that prevent insiders from sharing unpublished price-sensitive information. His relatives are alleged to have violated provisions that prohibit insiders from trading in listed securities while in possession of unpublished price-sensitive information.