Sebi disposed of the show cause notice (SCN) issued to said individuals “without issuance of any direction”, including any disgorgement or monetary penalty.
The case stemmed from Adani Green’s disclosure to stock exchanges about share purchase agreements to acquire stakes in SB Energy from SoftBank Group Capital Ltd and Bharti Global. Sebi noted that the announcement was followed by a rise in the company’s share price on the day, and treated the acquisition as potentially price sensitive given the scale of SB Energy’s portfolio relative to Adani Green’s operating capacity at the time.
The regulator’s investigation covered trading in Adani Green shares between January 28 and August 20. A common SCN dated November 10 alleged that Pranav Adani communicated unpublished price sensitive information (UPSI) related to the SB Energy acquisition to Kunal Shah, and that Kunal Shah and Nrupal Shah traded while in possession of UPSI, violating provisions of the SEBI Act and the insider trading regulations.
The notice also recorded alleged notional unlawful gains of Rs 50.92 lakh for Kunal Shah and Rs 40.45 lakh for Nrupal Shah. The order recounts that the core inference of communication was drawn from a phone call placed by Kunal Shah to Pranav Adani on May 16, 2021.
However, the authority noted that news reports about the SB Energy acquisition had already appeared earlier that day, and found that the call occurred after the information was available in the public domain.Sebi’s final findings turned on the concept of when the information ceased to be” sensitive information by becoming “generally available.”The order held that the information about the acquisition came into existence on May 13, 2021 and ceased to be UPSI on May 16 at 15:25 hours after it became generally available through the publication of news reports on a non-discriminatory basis.
It also observed that the market impact of the news flow appeared stronger than the eventual formal disclosure, noting that the stock hit upper circuit on May 17, 2021 and rose 4.84% on May 18, 2021 compared with a 3.75% rise on May 19, 2021 after the exchange filing.
Against that backdrop, Sebi concluded it could not sustain the allegation that the May 16 call was used to communicate with UPSI, since it happened after the information was already in the public domain.
The authority further noted that the trades by the two relatives were executed on May 17, 2021, which was after the information had become generally available, and therefore were not influenced by UPSI.
The trading data cited in the order shows that on May 17, 2021, Kunal Shah bought 50,000 shares of AGEL on the NSE, while Nrupal Shah bought 30,037 shares.
The proceedings also saw settlement attempts. The order notes that all noticees filed settlement applications in January 2024 without admitting or denying the alleged violations, but those applications were later withdrawn and disposed of, after which Sebi continued the matter through hearings before issuing the final order.
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