MUMBAI: In the second clean-chit to the Adani group in since September, the markets regulator Securities and Exchange Board (Sebi) has disposed of the insider trading proceedings against Pranav Adani, the cousin of Adani group chairman Gautam Adani, and two others in a case linked to Adani Green Energy’s 2021 acquisition of SB Energy, citing insufficient evidence to sustain charges.
This is the second favourable order for the Adani group after the regulator had in September cleared the group companies and several other entities of violating related-party transaction norms in matters arising from allegations made by US short-seller Hindenburg Research.
While Pranav is a director in several of Adani Group companies and a nephew of the group’s billionaire chairman Gautam Adani, Kunal Dhanpalbhai Shah and Nrupal Dhanpalbhai Shah are also his relatives. Kunal is married to Pranav’s cousin, while Nrupal is married to his sister.
In a 50-page order, Sebi has said although the three individuals qualified as connected persons under insider trading rules, it was unable to establish that they possessed or communicated unpublished price-sensitive information related to the transaction in the run-up to the deal announcement.
In a separate 63-page order, the regulator also dropped insider trading charges against Vinod Bahety, a former head of mergers & acquisitions at the Adani group, and three associated entities. These proceedings also pertained to trades executed ahead of the acquisition of SB Energy.
Sebi also alleged that Pranav Adani, who was aware of the deal negotiations, had passed on unpublished price-sensitive information to Kunal Shah and Nrupal Shah (both are Gautam Adani’s relatives), who then purchased Adani Green Energy shares on May 17-18, 2021—just days before the deal was announced on May 19—generating notional gains of Rs 51 lakh and Rs 40 lakh, respectively.
A key part of the case involved a phone call placed by Kunal to Pranav on May 16, 2021, which regulators initially viewed as potential evidence of unpublished price sensitive information communication.
The regulator further said “media coverage of the deal before the trades complicated its efforts to prove that the information was not generally available”.
These individuals denied the charges, arguing that detailed media reports on May 16 had already placed the information in public domain, and that their trades were based on news flow rather than insider information. Earlier in January 2024, they had sought settlement with Sebi but withdrew the applications later prompting Sebi to resume the adjudication processes.
However, Sebi could not establish evidence to proceed further leading to the closure of the proceedings without penalties or disgorgement.
Initially, Sebi had alleged that Bahety, who was included in Adani Green’s internal emails and deal discussions in late April and May 2021, had access to price sensitive information and communicated it one Tarun Jain, who in turn executed trades through Rajtaru Enterprises and MC Jain Infoservices. These entities bought 2 lakh Adani Green shares on May 14, 2021, accounting for 29% of the day’s NSE volume, and exited the position after the announcement, booking Rs 3.51 crore in profits.
These noticees contended that the deal was still at a preliminary stage until mid-May, and therefore, did not constitute violation of any insider trading norms.