Sebi Clears Insider Trading Charges Against Pranav Adani, His Relatives

New Delhi: Market regulator Sebi on Friday cleared Pranav Adani, a director in several companies of the Adani Group and nephew of billionaire Gautam Adani, of allegations that he shared price-sensitive information and violated insider trading rules.

Sebi also rejected accusations of violation of insider trading rules against Pranav Adani as well as two of his relatives.

The case centered on whether Pranav Adani failed to disclose confidential details about Adani Green Energy’s planned acquisition of SB Energy before the information was made public.

To examine this, Sebi investigated trading in shares of Adani Green Energy Ltd (AGEL) between January 28 and August 20, 2021. In November 2023, after reviewing an investigation report, the regulator believed that insider trading norms may have been violated and therefore initiated action against three whistleblowers – Pranav Adani, Kunal Dhanpalbhai Shah and Nrupal Dhanpalbhai Shah.

Kunal is married to Pranav Adani’s cousin, while Nrupal is married to his sister; The Shah brothers were accused of trading based on confidential information allegedly shared by Adani. These allegations were detailed in a reasoned statement published on November 10, 2023.

However, after completing the investigation, Sebi found no evidence that Adani had shared any unpublished price sensitive information (UPSI) or that the Shah brothers had traded on insider information.

In its 50-page order, Sebi stated that “the call dated May 16, 2021 was not to convey any UPSI made by Notification No. 1 (Pranav) and the transactions of Notification Nos. 2 (Kunal) and 3 (Nrupal) were bona fide and not affected by any UPSI on the company or its securities.” However, the regulator concluded that the claims were not maintainable and that no penalties or orders were required as the swaps appeared genuine.

Accordingly, Sebi disposed of the reasoned notice issued in November 2023 and closed the matter.

The regulator in turn examined the broader context of the AGEL-SB Energy transaction. AGEL announced on May 19, 2021 at 08:20:21 on BSE and NSE that it has signed share purchase agreements with Softbank Group Capital and Bharti Global to acquire SB Energy. Following this, shares of AGEL rose 3.75 percent from Rs 1,198.75 on May 18 to Rs 1,243.65 on May 19.

A key part of the case involved a phone call Kunal Shah made to Pranav Adani on May 16, 2021, which regulators initially viewed as potential evidence of UPSI communications.

However, Sebi found that the news about the SB Energy acquisition was published earlier that day, meaning the information was already public. Since UPSI is not supposed to be publicly available, Sebi held that information widely available through news releases cannot form the basis of insider trading.

Moreover, Sebi observed that the impact of the news on AGEL’s stock price was even greater than the official announcement on May 19. The stock peaked with an increase of 5 percent on May 17 and 4.84 percent on May 18, compared to a 3.75 percent increase on the day of the official announcement.

This showed that the market was already reacting to publicly available information. Therefore, Sebi concluded that the information ceased to be UPSI at 3:25 pm on May 16, after the news was published.

Considering that the Shah brothers’ transactions were carried out on May 17, after the information was made public, Sebi ruled that these transactions cannot be considered as insider trading. As a result, the regulator reconfirmed that the May 16 call did not involve UPSI sharing and that the transactions were genuine.

In a separate order, Sebi also cleared allegations of insider trading against Vinod Bahety, Tarun Jain, Rajtaru Enterprises and MC Jain Infoservices in connection with alleged insider trading in Adani Green Energy’s scrip.