Markets regulator Sebi on Friday cleared Pranav Adani, a director in several Adani Group companies and nephew of Gautam Adani, of allegations that he shared price sensitive information and violated insider trading rules.
The regulator also dismissed similar charges against his relatives Kunal Dhanpalbhai Shah and Nrupal Dhanpalbhai Shah.
The case examined whether Pranav Adani disclosed confidential details about Adani Green Energy’s planned acquisition of SB Energy before the information became public.
Sebi reviewed trading in Adani Green Energy Ltd shares between 28 January and 20 August, 2021, and after assessing an investigation report in November 2023, believed there could have been breaches of insider trading norms.
The regulator then issued a show cause notice on 10 November, 2023 to Pranav Adani, Kunal Shah and Nrupal Shah.
Kunal Shah is married to Pranav Adani’s cousin and Nrupal Shah is married to his sister. Both were accused of trading based on confidential information allegedly passed on by Pranav Adani.
However, Sebi found no evidence that Pranav Adani had shared any unpublished price sensitive information or that the Shah brothers had traded on insider information.
In a 50 page order, Sebi stated that “the call dated 16 May, 2021, was not for communicating any UPSI by Noticee No.1 and trades of Noticees No. 2 and 3 were genuine and not influenced by any UPSI about the company or its securities.”
With this, the regulator concluded that the allegations could not be sustained and that no penalties or directions were required.
The show cause notice issued in November 2023 was disposed of and the matter was closed.
Sebi examined the broader context of the AGEL SB Energy transaction. On 19 May, 2021, at 08:20:21 hours, Adani Green Energy announced on the BSE and NSE that it had signed share purchase agreements with Softbank Group Capital and Bharti Global to acquire SB Energy.
The company’s stock rose from Rs 1,198.75 on 18 May to Rs 1,243.65 on 19 May, an increase of 3.75 per cent.
A key element of the case involved a phone call made by Kunal Shah to Pranav Adani on 16 May, 2021. Regulators initially viewed this as possible evidence of UPSI sharing. Sebi found that news reports about the proposed acquisition had already been published earlier the same day, which meant the information was in the public domain.
UPSI must be non-public and Sebi held that information available widely through news reports could not form the basis of insider trading.
The regulator noted that the impact of the news reports on AGEL’s stock price was greater than that of the formal announcement on 19 May.
The scrip hit the upper circuit, rising 5 per cent on 17 May and 4.84 per cent on 18 May compared with the 3.75 per cent rise on the day of the official disclosure.
This indicated that the market had already reacted to the publicly available information. Sebi concluded that the information ceased to be UPSI on 16 May at 3:25 pm once the news was published.
Since the Shah brothers executed their trades on 17 May after the information had become public, Sebi held that these trades could not be considered insider trading.
The regulator reaffirmed that the 16 May call did not involve the sharing of UPSI and that the trades were genuine.
In a separate order, Sebi also cleared insider trading allegations against Vinod Bahety, Tarun Jain, Rajtaru Enterprises and MC Jain Infoservices in the matter involving Adani Green Energy.
