SEBI Bars NDTV Promoters For Insider Trading

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What has happened?

The Securities and Exchange Board of India has barred NDTV promoters, Prannoy Roy and Radhika Roy, from the securities market for two years.
The market regulator has also directed them to disgorge illegal gains of more than Rs 16.97 crore for indulging in insider trading over 12 years ago.

It’s where trades of securities such as stocks and bonds take place based on demand and supply.
Securities markets determine price of the securities.
Securities markets are divided into two levels.
Primary markets are where new securities are issued, while secondary markets are where existing securities are bought and sold.

SEBI has also barred seven other individuals and entities for insider trading in the shares of the media company for a period varying from one to two years.
Some of them have been asked to disgorge illegal gains made from trading in the shares when they were in possession of Unpublished Price Sensitive Information (UPSI).

It is defined as a malpractice wherein trade of a company’s securities is undertaken by people
Who by virtue of their work have access to the otherwise non public information which can be crucial for making investment decisions.
When insiders, e.g. key employees or executives who have access to the strategic information about the company,
Use the same for trading in the company’s stocks or securities.
It is highly discouraged by the Securities and Exchange Board of India to promote fair trading in the market for the benefit of the common investor.

The directions follow a probe conducted by SEBI between September 2006 and June 2008,
Wherein various violations of insider trading regulations were found.

All the entities have violated Prohibition of Insider Trading (PIT) Regulations, SEBI said in three separate orders passed late on Friday.
The amount has to be paid jointly or severally by them along with 6% interest from April 17, 2008, till the date of actual payment.

The order noted that Prannoy Roy and Radhika Roy together made a gain of Rs 16.97 crore while indulging in insider trading in the shares of NDTV while in possession of UPSI relating to the proposed reorganisation of the company.
Prannoy Roy was the chairman and whole-time director and Radhika Roy was the managing director during the period under investigation and were part of the decision-making chain that had led to the crystallisation of the UPSI.
Discussions pertaining to reorganisation of the company started on Sept. 7, 2007, and the disclosure was
made on April 16, 2008.
Hence, Sept. 7, 2007, to April 16, 2008, was the UPSI period.
Prannoy Roy and Radhika Roy sold shares on April 17, 2008, when the trading window for them was closed and made
a profit of Rs 16.97 crore SEBI’s order noted.
By doing so, they violated PIT norms and also acted in contravention of NDTV’s code of conduct forprevention of insider trading,
Which prohibited them from trading at least till 24 hours after the information was disclosed to the stock exchanges.
Roys have been restrained from accessing the securities market for two years and directed to disgorge illegal gains along with 6% interest per annum.

NDTV in a statement on Saturday said Sebi’s order against its founders Prannoy Roy
and Radhika Roy is based on,
An inaccurate assessment of facts and that the company will immediately appeal against it.

Q) Which of the following committee that was setup by SEBI gave recommendations on Insider Trading.