India’s Securities and Exchange Board (Sebi) on Friday imposed sanctions totaling Rs 70 million on Reliance Industries Ltd (RIL), its Chairman and Managing Director Mukesh Ambani, and two other entities for alleged manipulative trading of the securities. shares of the former Reliance Petroleum Ltd (RPL) in November 2007.
The market regulator has imposed fines of Rs 25 million and Rs 15 million on RIL and Ambani, respectively. Furthermore, Navi Mumbai SEZ Pvt Ltd was asked to pay Rs 20 crore and Mumbai SEZ Ltd was ordered to pay Rs 10 crore.
“I find it appropriate to consider the direction in the nature of the debarment and restitution that has already been passed against RIL as a relevant factor in deciding the amount of the fine,” said Sebi Adjudicating Officer BJ Dilip, in an order of 95 pages.
He said that any manipulation in the volume or price of securities always erodes investors’ confidence in the market when investors are on the receiving end of market manipulators.
“In the present case, general investors were unaware that the entity behind the aforementioned F&O segment transactions was RIL. The execution of the aforementioned fraudulent operations affected the price of RPL’s securities both in cash and in the F&O segments and hurt the interests of other investors, ”the order added.
“Noticee-2, being the Managing Director of RIL, was responsible for the handling activities of RIL. I believe that listed companies should exhibit the highest standards of professionalism, transparency and good corporate governance practices, which inspires confidence in investors operating in the capital markets. Any attempt to deviate from such standards will not only erode investor confidence, but will also affect the integrity of the markets, ”said the awarding official.
The execution of manipulative operations affects the price discovery system itself. It also has an adverse impact on the equity, integrity and transparency of the stock market, the order added.
The RPL case has been on hold for the past 13 years. RIL had sold 4.1 percent of its stake in RPL. However, to avoid a drop in RPL’s share price, the shares were apparently sold first on the futures market and then on the spot market. The crux of Sebi’s notice is that the company knew there would be a sale of shares on the spot market, and therefore its sales on the futures market prior to that amounted to insider trading. RPL merged with RIL in 2008.
On November 6, 2020, the Securities Appeal Court (SAT) had dismissed a statement from RIL challenging the 447 million rupee return order approved by Sebi.
Sebi’s full-time member, in an order of March 24, 2017, ordered RIL to repay an amount of Rs 447.27 million along with interest calculated at a rate of 12 percent per annum from November 29. from 2007 onwards until the payment date. . In addition, RIL was prohibited from trading equity derivatives on the F&O segment of stock exchanges, directly or indirectly, for one year from the date of such order.
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