The Securities and Exchange Board of India (SEBI) on Friday, 1 January, imposed penalties totalling Rs 40 crore on Reliance Industries Ltd, its chairman and managing director, Mukesh Ambani, for alleged manipulative and fraudulent trading in the shares of erstwhile Reliance Petroleum Ltd, back in November 2007, PTI reported.
Two other entities promoted by Anand Jain, who once served in the Reliance Group, were also fined a total of Rs 30 crore by the securities regulator.
According to the PTI report, fines of Rs 25 crore and Rs 15 crore have been imposed on Reliance Industries Ltd and Ambani, respectively. Besides, Navi Mumbai SEZ Pvt Ltd has been asked to pay a penalty of Rs 20 crore and Mumbai SEZ Ltd has been directed to pay Rs 10 crore.
Reliance Petroleum Limited’s Case
The case pertains to sale and purchase of RPL shares in the cash and the futures segments in November 2007. This followed RIL's decision in March 2007 to sell 4.1 percent stake in RPL, a listed subsidiary that was later merged with RIL in 2009.
On 24 March 2017, SEBI had ordered RIL and certain other entities to disgorge over Rs 447 crore in the RPL case. In November 2020, the Securities Appellate Tribunal dismissed the company's appeal against the order.
In Friday’s 95-page adjudication order connected to the same matter, SEBI’s Adjudicating Officer BJ Dilip said any manipulation in the volume or price of securities always erodes investor confidence in the market when investors find themselves at the receiving end of market manipulators.
"In the instant case, the general investors were not aware that the entity behind the above F&O segment transactions was RIL. The execution of the... fraudulent trades affected the price of the RPL securities in both cash and F&O segments and harmed the interests of other investors," he said in the order.
While noting that execution of manipulative trades affects the price discovery system itself, the adjudicating officer said, "I am of the view that such acts of manipulation have to be dealt sternly so as to dissuade manipulative activities in the capital markets."
“I note that Noticee-2, being the Managing Director of RIL, was responsible for the manipulative activities of RIL. I am of the view that listed companies should exhibit highest standards of professionalism, transparency and good practices of corporate governance, which inspires confidence of the investors dealing in the capital markets,” he added.
RIL had earlier said it would challenge SAT’s order in the Supreme Court.
(With inputs from PTI)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)