India’s markets regulator on Friday fined Reliance Industries Ltd (RIL) and its chairman and managing director Mukesh Ambani a total of ₹40 crore for alleged manipulation in the trading of Reliance Petroleum Ltd’s securities.
Two other entities, Navi Mumbai SEZ Pvt Ltd and Mumbai SEZ Ltd, have been fined ₹20 crore and ₹10 crores, respectively, by the Securities and Exchange Board of India.
According to Sebi’s order, RIL executed a well-planned operation with its agents to make undue gains from the trading of its erstwhile listed unit, 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.
“It was also observed that Mukesh D. Ambani, being the CMD of RIL, was responsible for its day-to-day affairs and thereby, liable for the manipulative trading done by RIL,” the order said. “It was observed that Navi Mumbai SEZ and Mumbai SEZ 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,” it stated.
Sebi warned RIL that a failure to pay the penalty within 45 days will result in the initiation of recovery proceedings through the attachment and sale of its properties.
A RIL spokesman couldn’t be immediately reached for comment.
The fines relate to a 24 March 2017 Sebi order that found fraudulent trading in the futures and options segment of the securities of RPL by RIL. In that order, Sebi banned RIL from equity derivatives trading for a year and also directed the 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.
On 5 November 2020, the Securities Appellate Tribunal (SAT) dismissed RIL’s plea against Sebi in connection with the sale of RPL shares.
RIL said it would challenge the SAT order in the Supreme Court. On 18 December, the SC, while admitting RIL’s plea, asked it to deposit ₹250 crore.
