NDTV's Prannoy Roy and His Wife Radhika Get SEBI Notice for Insider Trading
Market regulator Securities and Exchange Board of India (SEBI) has issued a show-cause notice to Dr Prannoy Roy and his wife Radhika, both promoters of New Delhi Television Ltd (NDTV) for alleged insider trading. 
 
In a regulatory filing, NDTV says, "This to inform you that Dr Prannoy Roy and Ms Radhika Roy, the promoters of NDTV, have informed the Company that on 10 September 2018, they have received a show cause notice (SCN) dated 31 August 2018, issued under Sections 11(1), 11(4) and 113 of the Securities and Exchange Board of India Act, 1992 (SEBI Act) by SEBI, alleging violation, inter—alia, of provisions of Section 12A (d) and (e) of SEBI Act read with Regulation 3(i) and Regulation 4 of SEBI (Prohibition of Insider Trading) Regulations, 1992." 
 
"The Promoters of NDTV are in the process of seeking legal advice to take appropriate action in the said matter. Since the Company is not a party to the SCN, there will not be any financial implications of the SCN on the Company," NDTV added.
 
NDTV closed Tuesday 3% down at Rs34.30 on the BSE (Bombay Stock Exchange), while the 30-share Sensex ended the day 1.34% down at 37,413.
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COMMENTS

Sreepathid

5 months ago

Drama going on for a long time. the soap opera is going to continue.

SEBI Backtracks on FPI Rules, To Allow NRIs and PIOs To Hold Non-controlling Stake
After facing a backlash from foreign funds' lobby group, market regulator Securities and Exchange Board (SEBI) has radically changed its course on banning non-resident Indians (NRIs) and persons of Indian origin (PIOs) from owning foreign portfolio investment (FPI) vehicle or structure. SEBI may allow NRIs and PIOs to hold 25% as a single beneficiary and up to 50% as a group in an FPI. 
 
In April this year, SEBI had banned NRIs and PIOs from being beneficial owners (BOs) of an FPI, giving them six months to make the changes.
 
The HR Khan Committee suggestions were made in response to the strong objections raised by the Asset Management Roundtable of Indian (AMRI) to the SEBI circular issued on 10 April 2018 which effectively placed a blanket ban on investments through certain FPIs. 
 
On Saturday, the Khan Committee recommended some changes in the norms in know-your-customer (KYC) guidelines for NRI and PIOs. The Committee was set up by SEBI to review the FPI rules. The Committee met last week against the backdrop of a sharp fall in market indices. The market was supposedly rattled by the new rules that would be applicable to the FPIs from December, forcing them to liquidate their investments in India. 
 
Commenting on the interim recommendations of the Khan Committee, Mohit Kapoor, founding partner, Universal Legal, says, “The restrictions imposed on FPI's managed by NRI OCI, RI and PIO's is based on unwarranted concerns by SEBI that many of these FPI's indulge in money laundering. Instead of imposing such stringent conditions on all FPI's and harming the investor sentiment, it would prudent for the regulator to strengthen its enforcement mechanism and take action against those who have contravened the existing rules.”
 
The circular issued on 10 April 2018 had said that NRIs, PIOs and overseas vehicles set up by Indian financial services groups cannot be 'beneficial owners' of FPIs. Under the Prevention of Money Laundering Act (PMLA) and the related rules, beneficial ownership means 25% ownership in a company or 15% in a trust or partnership. 
 
All existing FPIs whose clubbed investment in equity shares of a company is in breach of the provisions of Regulation 21(7) of SEBI (Foreign Portfolio  Investors) Regulations, 2014 were  required to ensure compliance within six months from the date of the circular. SEBI had given market players six months to adhere to the new rules, which would have got over by 10th September. On 21st August, SEBI extended that date till 31 December 2018. 
 
Alarmed by this, on 3rd September, a lobby of institutional investors and a top law firm advising it openly criticised the SEBI circular, describing the new rules as ‘racial discrimination’ that could lead to a sell off in stocks. It said that the SEBI "circular is vague, opaque, and confusing. It distrusts NRIs and resident institutional community… A Nigerian can manage an FPI but not an NRI or a large Indian group," said Nandita Agarwal Parker, president of AMRI, an association of FPIs. 
 
AMRI and Nishith Desai, founder of law firm Nishith Desai Associates, jointly addressed the media on Monday. “We understand the government's concern over round-tripping. FPIs have no objection in disclosing who the beneficial owners are. But why restrict investments?” asked Mr Desai at the press conference. 
 
Last week, a report from Times of India mentioned that the SEBI has taken ‘a strong exception’ to the contention as much as $75 billion will flow out of India due to changes regulations governing FPI, warning that market participants cannot threaten SEBI. Of the $450 billion investments by FPIs, $75 billion is estimated to be managed by NRIs, OCIs, PIOs and regulated resident institutions and individuals. However, SEBI has now effectively backtracked on its policy.
 
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HR Khan Committee Meets To Discuss FPIs’ Contention of a Possible US$ 75 Billion Outflow
While a Times of India report mentioned on Wednesday that the Securities and Exchange Board (SEBI) has taken ‘a strong exception’ to the contention as much as $75 billion will flow out of India due to changes regulations governing foreign portfolio investors (FPI), the HR Khan Committee set up by SEBI to review the FPI rules, met against the backdrop of a sharp fall in market indices of the last few days. The market was supposedly rattled by the new rules that would be applicable to the FPIs from December, forcing them to liquidate their investments in India.
 
A group of non-resident Indians (NRIs) and offshore investment vehicles of financial services firms based in India had addressed the media a few days ago warning that as much as $75 billion worth of investments may be withdrawn from India by December 2018 if SEBI did not modify a circular that put restrictions on NRIs and people of Indian origin (PIOs) from investing via the FPI route. 
 
The circular issued on 10 April 2018 had said that NRIs, PIOs and overseas vehicles set up by Indian financial services groups cannot be ‘beneficial owners’ of FPIs. Under the Prevention of Money Laundering Act (PMLA) and the related rules, beneficial ownership means 25% ownership in a company or 15% in a trust or partnership. 
 
Hence, the FPIs were required to provide the list of beneficial owners (BO), in a format prescribed, within six months from 10 April 2018. It also said that the existing FPI structures not in conformity with the requirement were required to change their structure or close their existing position in Indian securities market within six months from the date of the circular. 
 
The existing FPIs or their investors identified on basis of threshold for identification of BO in accordance with Rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, who do not conform to the  requirements were required to ensure compliance within six months of the date of the circular.
 
All existing FPIs whose clubbed investment in equity shares of a company is in breach of the provisions of Regulation 21(7) of Securities and Exchange Board of India  (Foreign  Portfolio  Investors)  Regulations,  2014 were  required  to  ensure compliance within six months from the date of the circular. SEBI had given market players six months to adhere to the new rules, which would have got over by 10th September. On 21st August, SEBI extended that date till 31 December 2018. 
 
Alarmed by this, on 3rd September, a lobby of institutional investors and a top law firm advising it openly criticised the SEBI circular, describing the new rules as “racial discrimination” that could lead to a sell off in stocks. It said that the SEBI “circular is vague, opaque, and confusing. It distrusts NRIs and resident institutional community… A Nigerian can manage an FPI but not an NRI or a large Indian group,” said Nandita Agarwal Parker, president of Asset Managers Roundtable of India (AMRI), an association of FPIs. 
 
AMRI and Nishith Desai, founder of law firm Nishith Desai Associates, jointly addressed the media on Monday. “We understand the government’s concern over round-tripping. FPIs have no objection in disclosing who the beneficial owners are. But why restrict investments?” asked Mr Desai at the press conference. 
 
“Is it right to think that the entire NRI community is facilitating money laundering? Who markets the India story to foreign investors? It is the NRIs and Indian institutions,” he argued. “An immediate impact of the circular (if not amended) is that from 31 December 2018, about $75 billion investment managed by overseas citizens of India (OCIs), PIOs, NRIs and resident institutions (RIs), will be disqualified from investing into India and will have to be withdrawn and liquidated within a short time frame, thereby affecting the Indian markets and the Indian currency,” said an AMRI letter dated 29th August to SEBI Chairman Ajay Tyagi, copies of which were addressed to the Prime Minister and finance minister. 
 
Of the $450 billion investments by FPIs, $75 billion is estimated to be managed by NRIs, OCIs, PIOs and regulated resident institutions and individuals. 
 
“Unfortunately, the circular was issued without any prior consultation with the stakeholders, who were not able to raise these concerns to the regulator before the circular became applicable,” AMRI said in its letter, adding that the circular, which was meant to enhance know-your-customer (KYC) norms, has placed a blanket ban on investments through certain FPIs. 
 
The Times of India article had quoted anonymous SEBI officials as saying that it would “not be threatened by strong-arm tactics being employed by this group which has created a panic-like situation in the market. It is preposterous and highly irresponsible to claim that $75 billion of FPI investment will move out of the country because of SEBI circular issued in April 2018” reported the newspaper. 
 
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COMMENTS

Saravanan R

6 months ago

Yes. Why these FPIs wait till the circular takes effect ? They were deliberately waiting for the issue to gain force as a tempest. So that Govt or SEBI can be tempered or cowed down to withdraw the circular. Congress Govt had always handled issues like this way to arm-twist the investors and then "accede" to their request ('threat'). Now industry and investors try the same trick.

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