CERC Orders Probe Into GNA Energy After SEBI Insider Trading Findings

The Central Electricity Regulatory Commission (CERC) has issued a suo motu notification ordering an investigation into GNA Energy Pvt. Ltd. after the market regulator, the Securities and Exchange Board of India (SEBI), prima facie found the firm’s involvement in insider trading. The case is linked to alleged insider trading and market manipulation associated with a confidential CERC policy on market coupling.

In its order, CERC said that it took cognizance of SEBI’s interim order, which found the involvement of certain officials of GNA Energy in trading based on confidential price-sensitive information (UPSI) about an upcoming CERC order concerning market coupling in India’s electricity market. The trades allegedly led to a plunge in the prices of Indian power exchanges such as the Indian Energy Exchange (IEX).

Investigation Panel Constituted 

The central power regulator also constituted an investigation authority to scrutinize the matter. “We, on a harmonious reading of the provisions of Regulation 49(2) of the PMR, 2021, ... direct an investigation into the alleged involvement of the Respondent GNAEPL in activities of market manipulation and insider trading...”

It further added, “Accordingly, we appoint Shri R. Pushkarna, Chief (Finance), assisted by Shri Manish Choudhry, Joint Chief, as the investigation authority to undertake an appropriate investigation in the matter and submit a report to the Commission on such investigation, preferably within a period of 21 days from the date of this order.”

Final Order

The CERC order in question, issued in July 2023, proposed the implementation of market coupling in the Day-Ahead Market (DAM). As per SEBI’s interim investigation, some officials of GNA Energy took large put option positions on IEX stocks prior to the announcement and allegedly sold them later at a profit, in a pre-planned action.

CERC noted that SEBI’s interim order hinted at the alleged transfer of gains to various entities, including the company regulated by CERC. “Thus, there exist sufficient reasons for this Commission to order an investigation/enquiry into the alleged involvement of the Respondent in the activities of market manipulation and insider trading, in accordance with the provisions of the Act, read with Regulation 49(2)(b)(i) and (iii) of the PMR, 2021,” CERC said.