sebi:AO/BJD/MAS/EAD/171-176/2018
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Facts / Headnote
Proceedings against Noticee 2 abated due to death; Noticees 1, 3, 4, 5 and 6 found liable and penalties imposed
Provisions invoked
- s. 15A
- s. 15
- s. 21
- s. 27
- s. 15I
- s. 23A
- s. 23E
- s. 23
Regulations
- Reg. 13
- Reg. 12
- Reg. 4
- Reg. 2
- Reg. 13(6)
- Reg. 13(4)
- Reg. 13(5)
- Reg. 30(2)
- Reg. 12(2)
Parties
- NDTV (Noticee no.1)
- Mr. K V L Narayan Rao (Noticee no.2)
- Mr. Prannoy Roy (Noticee no.3)
- Ms. Radhika Roy (Noticee no.4)
- Mr. Vikramaditya Chandra (Noticee no.5)
- Mr. Anoop Singh Juneja (Noticee no.6)
Holding
The Adjudicating Officer held NDTV (Noticee 1) liable for violating Regulation 13(6) of SEBI (PIT) Regulations and Clauses 2.1 and 7.0(ii) of Schedule II read with Regulation 12(2), and Noticees 3 to 6 liable for violating Clause 36 of the Listing Agreement read with Section 21 of SCRA and Clause 3.2 of Schedule II read with Regulation 12(2), for failure to disclose the Rs. 450 crore tax demand and delayed disclosure of Noticee 2's share sales. Proceedings against Noticee 2 abated due to his demise.
Full text
Page 2 of 23 BACKGROUND Facts of the case in brief 1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") conducted investigation based on a complaint received from Quantum Securities Pvt. Ltd. (QSL), a shareholder of NDTV, that NDTV did not disclose the order of Dispute Resolution Panel-II(DRP-II) of the Income Tax Department, within 2 days of receipt of information, to the stock exchanges. There was also allegation that Vice Chairperson of NDTV had engaged in insider trading by selling his shares based on the information about DRP-II order and did not make the required disclosures to the stock exchanges regarding the sale of his shares as required under SEBI (Prohibition of Insider Trading) Regulations. Investigation was carried out to ascertain whether there was any violation of the provisions of SEBI Act, 1992, SCRA 1956 and various Rules and Regulations and Guidelines made there under.
Page 3 of 23 4.1. Mr. K V L Narayan Rao, ( referred to as Noticee no.2) Vice-Chairperson and a director of NDTV, made delayed disclosures under regulation 13(4) read with Regulation 13(5) of SEBI (Prohibition of Insider Trading) Regulations (hereinafter referred as SEBI(PIT) Regulations) to the stock exchanges for cumulative sale value of the transactions more than Rs.5,00,000. 4.2. NDTV (referred to as Noticee no.1) made delayed disclosures under clause 36 of the Listing Agreement to the stock exchanges regarding the tax demand of Rs. 450 Crore raised against NDTV by the Income Tax Department. 4.3. NDTV made delayed disclosures under Regulation 13(6) of SEBI(PIT) Regulations to the stock exchanges regarding the disclosures made by Mr. K V L Narayan Rao on December 20, 2013 & January 16, 2014. 4.4. The non–independent directors of NDTV, namely, MR. Prannoy Roy (Noticee no.3), Ms. Radhika Roy(Noticee no.4), Mr. K V L Narayan Rao, Mr. Vikramaditya Chandra(Noticee no.5) and its compliance officer, Mr. Anoop Singh Juneja(Noticee no.6) were also liable for the aforesaid infractions, they being the executives in-charge of the company. 4.5. NDTV failed to provide price sensitive information in accordance with Clause 2.1, 3.2 & 7.0(ii) of Schedule II for Code of Corporate Disclosure Practices for Prevention of Insider Trading read with Regulation 12(2) of SEBI (PIT) Regulations. 4.6. Since Mr. K V L Narayan Rao was the director of NDTV, he was bound by the model code of conduct under
Page 4 of 23 shares during the validity period of pre-clearance of trades obtained by him. 4.7. It was noted that Mr. KVL Narayan Rao had sold 10515 shares from December 16, 2013 - December 18, 2013. The cumulative sale value of the transaction was more than Rs. 5,00,000. Hence Mr. K V L Narayan Rao was required to make disclosure under Regulation. 13(4) read with Regulation 13(5) of SEBI(PIT)Regulations, to NDTV and to the stock exchanges within 2 working days i.e by December 20, 2013. Further on December 19, 2013, Mr. K V L Narayan Rao sold 25000 shares whose sale value was more than Rs. 5,00,000. Hence Mr. K V L Narayan Rao was required to make disclosure under 13(4) read with Regulation 13(5) to NDTV and stock exchange within 2 working days i.e by December 21, 2013. It was observed that the Mr. K V L Narayan Rao has made required disclosures to NDTV on December 20, 2013. 4.8. Similarly, on January 14 & January 15, 2014, Mr.K V L Narayan Rao has sold 15,000 shares and 13,000 shares respectively and the sale value of both the transactions was more than Rs. 5,00,000. Hence Mr. K V L Narayan Rao was required to make disclosure under Regulation 13(4) read with Regulation 13(5) of SEBI(PIT) Regulations, to NDTV and to the stock exchanges within 2 working days i.e by January 16, 2014 & January 17, 2014 respectively. It was observed that the Mr. K V L Narayan Rao has made required disclosures to NDTV on January 16, 2014. 4.9. Mr. K V L Narayan Rao stated that vide letters dated D
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Source: SecMarx — sebi:AO/BJD/MAS/EAD/171-176/2018. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.