On the 1st of January 2021, the Securities and Exchange Board of India (SEBI) imposed a heavy fine on Reliance Industries (RIL.)
The SEBI imposed a fine of Rs. 25 crores on the company RIL and Rs. 15 crores on the Managing Director and Chairman of RIL Mukesh Ambani.
The fine was imposed for alleged manipulative trading in the shares of the erstwhile Reliance Petroleum (RPL,) back in November 2007.
Besides RIL, Navi Mumbai SEZ also asked to pay a penalty of Rs. 20 crores and Mumbai SEZ to pay Rs. 10 crore for money fraud.
In March 2007, RIL decided to sell 4.1 % stake in RPL, a listed subsidiary that was later merged with RIL in 2009.
In a 95 page order, the SEBI Adjudicating Officer B.J. Dilip said any manipulation in the volume or price of securities always erodes investor confidence in the market.
Mr. Dilip said, “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.”
The SEBI issued an order regarding the fines which read, “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 further read, “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 officer said execution of manipulative trades affects the price discovery system. He further 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.”
On March 24, 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 (SAT) dismissed the company’s appeal against the order.
Stay tuned for further updates.
