Regstreet Law Advisors represented Kunal Shah and Nrupal Shah before SEBI’s Quasi-Judicial Authority in proceedings alleging insider trading in the scrip of Adani Green Energy Ltd. (AGEL) under the SEBI Act, 1992 and the SEBI (Prohibition of Insider Trading) Regulations, 2015. The matter was led by Sumit Agrawal, Founder & Managing Partner, along with Abhineet Pange, Partner, Kavish Garach, Senior Associate, and Mahima Jayan, Associate.
SEBI has passed a final order fully exonerating all noticees, dropping all allegations with no penalties or adverse directions. The case arose from trades linked to AGEL’s acquisition of SB Energy Holdings Limited, which SEBI alleged to be UPSI.
𝐊𝐞𝐲 𝐅𝐢𝐧𝐝𝐢𝐧𝐠𝐬 𝐨𝐟 𝐒𝐄𝐁𝐈
After examining the records and submissions, SEBI held that:
1. 𝐒𝐭𝐚𝐧𝐝𝐚𝐫𝐝 𝐨𝐟 𝐏𝐫𝐨𝐨𝐟 𝐢𝐧 𝐈𝐧𝐬𝐢𝐝𝐞𝐫 𝐓𝐫𝐚𝐝𝐢𝐧𝐠 𝐂𝐚𝐬𝐞𝐬: Insider trading charges, being quasi-criminal in nature, require a high preponderance of probabilities, which was not met in the present case.
2. 𝐔𝐧𝐜𝐞𝐫𝐭𝐚𝐢𝐧𝐭𝐲 𝐀𝐫𝐨𝐮𝐧𝐝 𝐔𝐏𝐒𝐈 𝐚𝐧𝐝 𝐈𝐭𝐬 𝐂𝐫𝐲𝐬𝐭𝐚𝐥𝐥𝐢𝐬𝐚𝐭𝐢𝐨𝐧: SEBI held that the SCN was inconsistent on when the alleged UPSI arose and reiterated that, in M&A transactions, UPSI does not arise from preliminary discussions but only upon crystallisation of the transaction.
3. 𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐀𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞 𝐓𝐡𝐫𝐨𝐮𝐠𝐡 𝐌𝐞𝐝𝐢𝐚 𝐑𝐞𝐩𝐨𝐫𝐭𝐬: SEBI noted that prior media reports had already disclosed substantive details of the proposed acquisition on a non-discriminatory basis, and the investigation failed to show what material information remained unpublished thereafter.
4. 𝐀𝐛𝐬𝐞𝐧𝐜𝐞 𝐨𝐟 𝐄𝐯𝐢𝐝𝐞𝐧𝐜𝐞 𝐨𝐟 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐨𝐫 𝐏𝐨𝐬𝐬𝐞𝐬𝐬𝐢𝐨𝐧 𝐨𝐟 𝐔𝐏𝐒𝐈: SEBI found that no direct or cogent evidence existed to establish communication of UPSI and held that frequent telephonic contact and familial relationships, by themselves, are insufficient to prove possession of UPSI.
5. 𝐁𝐮𝐫𝐝𝐞𝐧 𝐭𝐨 𝐄𝐬𝐭𝐚𝐛𝐥𝐢𝐬𝐡 𝐅𝐨𝐮𝐧𝐝𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐄𝐥𝐞𝐦𝐞𝐧𝐭𝐬: SEBI concluded that the foundational burden of proving possession or access to UPSI at the time of trading was not discharged.
In light of these findings, SEBI dropped the proceedings in full, exonerating all noticees and reaffirming that insider trading charges must be based on clear, cogent evidence – not conjecture or association.
𝘖𝘳𝘥𝘦𝘳 𝘭𝘪𝘯𝘬: https://lnkd.in/gA66uV3q
𝘍𝘰𝘳 𝘧𝘶𝘳𝘵𝘩𝘦𝘳 𝘤𝘰𝘯𝘵𝘦𝘹𝘵: https://lnkd.in/gsi_6K7b
