InvestorQ : Can you tell me about the penalty imposed by SEBI on Reliance Industries in the RPL case?
sarah Leo made post

Can you tell me about the penalty imposed by SEBI on Reliance Industries in the RPL case?

Rashi Mehra answered.
2 months ago

SEBI imposed stringent penalties on Reliance Industries, its chairman Mukesh Ambani and 2 other entities for alleged manipulative trading in the shares of erstwhile Reliance Petroleum in November 2007. It may be recollected that in late 2007, RPL had been fully merged into Reliance Industries and the allegations pertain to insider trading on insider information.

While SEBI has imposed a penalty of Rs.25 crore on Reliance Industries, it has also imposed a fine of Rs.15 crore on Mukesh Ambani in his personal capacity. In addition, the Navi Mumbai Special Economic Zone or SEZ has also been asked to cough a penalty of Rs 20 crore, while the Mumbai SEZ has been directed to pay Rs 10 crore as penalty.

According to SEBI, these penalties pertain to the sale and purchase of RPL shares in the cash as well as in the futures segments in November 2007. In March 2007, RIL had taken a decision to sell 4.1% stake in RPL, its listed subsidiary. However, later in 2009, RPL was merged into RIL. The 95-page order hints at loss of investor confidence due to this.

According to the SEBI order, investors were not aware that the entity behind the F&O orders was RIL and this had been detrimental to the interests of small traders. SEBI also noted that such actions had also prejudiced price discovery. In the past, most such allegations of insider trading have been extremely hard to prove, as the loss and intent have to be proved.

It may be recollected that on 24 March 2017, SEBI ordered RIL and related entities to disgorge a sum of Rs.447 crore in the RPL insider trading case. RIL had appealed against the SEBI order to the SAT, but in November 2020, the SAT had dismissed RIL’s appeal against the order. RIL is also likely to approach the Supreme Court against the tribunal decision.