Mumbai: India's market regulator, Securities and Exchange Board of India (Sebi), on Friday fined Reliance Industries (RIL) ₹25 crore and its chairman and managing director Mukesh Ambani ₹15 crore, in relation to trading in the shares of erstwhile Reliance Petroleum.
Two more entities, Navi Mumbai SEZ Pvt Ltd and Mumbai SEZ Ltd have been fined ₹20 crore and ₹10 crore, respectively.According to today's order, RIL had entered into a well-planned operation with its agents to corner the open interest in RIL's erstwhile listed subsidiary, Reliance Petroleum Ltd's (RPL), Futures to earn undue profits from the sale of RPL shares in both cash and futures segments and to dump large number of RPL shares in the cash segment during the last ten minutes of trading on the settlement day, resulting in a fall in the settlement price.
It was also observed that Mukesh D. Ambani, being the Chairman & Managing Director of RIL, was responsible for its day-to-day affairs and thereby, liable for the manipulative trading done by RIL," the order said, adding, it was also observed that Navi Mumbai SEZ Pvt. Ltd. and Mumbai SEZ Ltd. have allegedly aided and abetted RIL by providing funds to one of the agents appointed by RIL, who in turn provided funds to other 11 agents for making the margin payments for the short positions in RPL November Futures," the order stated.
The case pertains to a Sebi order, dated 24 March, 2017, claiming fraudulent trading in the futures and options (F&O) segment of the securities of RPL which was merged with the former in 2009.
In March 2007, RIL had sold 4.1% of its stake in RPL. However, to prevent a plunge in the RPL share price, the equity was apparently sold first in the futures market and later in the spot market.
After finding that RIL violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP), making unlawful gains, Sebi had banned RIL from equity derivatives trading for a year and had also directed the oil-to-telecom conglomerate to disgorge ₹447 crore, along with an annual interest of 12% since 29 November, 2007, taking the total penalties to nearly ₹1,000 crore.
Upholding Sebi's order, on 5 November 2020, the Securities Appellate Tribunal (SAT) in a 2:1 majority order, dismissed RIL's plea against Sebi in connection with the sale of RPL shares by RIL in November 2007.
RIL had said it would approach the Supreme Court against the SAT order.
On 18 December 2020, the Supreme Court, while admitting RIL's plea, asked the company to deposit ₹250 crore-- nearly 50% of the disgorged amount of ₹447.27 crore-- as ordered by the Securities Appellate Tribunal in the case.
In its Friday order, Sebi said, "In the event of failure to pay the said amount of penalty within 45 days of the receipt of this Order, recovery proceedings may be initiated under Section 28A of the SEBI Act for realization of the said amount of penalty along with interest thereon, inter alia, by attachment and sale of movable and immovable properties."
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