Radhika and Prannoy Roy, the couple who started and continue to head India’s oldest dedicated news channel NDTV, have disputed findings by the stock market regulator that they engaged in insider trading and said they will appeal the regulator’s order.
On Friday, Securities and Exchange Board of India had issued an order directing them to ‘disgorge’ Rs 16.97 cr with interest, and said the amount was illegally gained by the NDTV promoters via insider trading.
SEBI also froze the equity shares owned by the couple for two years and banned them from accessing the stock market for an equivalent amount of time.
SEBI also found several other employees guilty of acting upon undisclosed information to make a profit by buying and selling of NDTV shares in detailed orders.
In a letter to New Delhi Television Ltd, the promoter couple said they plan to “urgently appeal” the SEBI order.
“The Promoters have informed the Company that their lawyers, led by Ms. Fereshte Sethna, Senior Partner at DMD Advocates, hold that the SEBI order is based on an inaccurate assessment of facts and will not withstand scrutiny in appeal. The appeal will be filed immediately,” NDTV said, informing its other shareholders of the turn of events.
In its order dated November 27, 2020, passed under Sections 11 and 19 of SEBI Act, 1992, the regulator held the couple guilty of insider trading in NDTV shares between December 2007 to April 2008.
Insider trading refers to leveraging privileged and undisclosed information gained due to an association with the company to buy or sell the company’s shares to make profits.
The regulator found that some of the accused traded NDTV stock in the lead up to several strategic announcements related to the company, such as entering into a strategic alliance with Karan Johar and Dharma Productions in 2006 and signing an agreement with US-based NBC Universal in 2008.
SEBI directed the promoters to “jointly or severally, disgorge the amount of wrongful gain of ₹16,97,38,335/- as computed in the Show Cause Notice dated August 31, 2018, along with interest at the rate of 6% per annum from April 17, 2008, till the date of actual payment of disgorgement amount along with interest, within 45 days from the date of coming into force of the order.”
It also directed that the promoters “shall be restrained from accessing the securities market and further prohibited them from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of 2 years. Further, during the period of restrain the existing holding of securities, including the units of mutual funds shall remain under freeze in respect of the promoters”.
This is not the first time NDTV promoters have run into trouble with regulatory agencies, particularly after the United Progressive Alliance headed by the Congress Party lost power in 2014 and the National Democratic Alliance headed by the BJP came to power at the center.