The case arose out of Adani Green’s disclosure to the stock exchanges about share purchase agreements to acquire stakes in SB Energy from SoftBank Group Capital Ltd and Bharti Global. Noting that the announcement was followed by a rise in the company’s share price on the day, Sebi treated the acquisition as potentially price sensitive given the size of SB Energy’s portfolio relative to Adani Green’s operating capacity at the time.The regulator’s probe related to trading in Adani Green shares between January 28 and August 20. A joint SCN dated November 10 alleged that Pranav Adani passed on unpublished price sensitive information (UPSI) relating to the SB Energy acquisition to Kunal Shah, and that Kunal Shah and Nrupal Shah traded while in possession of UPSI, violating the provisions of the SEBI Act and the insider trading regulations.
The notice also recorded alleged illegal gains of Rs 50.92 lakh for Kunal Shah and Rs 40.45 lakh for Nrupal Shah. The order states that the main inference of the communication was drawn from a phone call from Kunal Shah to Pranav Adani on May 16, 2021.
However, the authority noted that news reports about the SB Energy takeover had already appeared earlier that day and found that the call took place after the information was available in the public domain.
Sebi’s final findings were based on the concept of when the information ceased to be ‘sensitive information’ and became ‘generally available’. The order stated that the information regarding the acquisition came into existence on May 13, 2021 and ceased to be UPSI on May 16 at 3:25 PM after it became generally available through the publication of news reports on a non-discriminatory basis.
It also noted that the market impact of the news flow appeared to be stronger than the eventual formal disclosure, noting that the shares entered the upper circuit on May 17, 2021, rising 4.84% on May 18, 2021, compared to a 3.75% increase on May 19, 2021 after the exchange filing.
In that backdrop, Sebi concluded that it could not substantiate the claim that the May 16 call was used to communicate with UPSI as this happened after the information was already in the public domain.
The authority further noted that the two family members’ transactions were carried out on May 17, 2021, which was after the information became publicly available, and were therefore not influenced by UPSI.
The trading data mentioned in the order shows that Kunal Shah bought 50,000 shares of AGEL on the NSE on May 17, 2021, while Nrupal Shah bought 30,037 shares.
The proceedings also included attempts at settlement. The order notes that all the notices filed settlement applications in January 2024 without admitting or denying the alleged violations, but these applications were later withdrawn and disposed of, following which Sebi pursued the matter through hearings before issuing the final order.
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