Why has SEBI imposed a penalty on Reliance Industries?

SEBI has imposed a penalty on Reliance Industries and 2 of its compliance officers as they allegedly violated fair disclosure norms. This order pertains to Facebook's $5.7 billion investment in Jio Digital in 2020. These investments were to enhance the symbiotic linkage between Facebook, WhatsApp and Reliance retail venture. After the sale of the O2C business to Aramco fell through, this was the best option in front of Reliance Industries to reduce its debt. RIL had then set target to reduce its net debt (net of cash) to zero by 2022.

SEBI has objected to the fact that Reliance Industries did not make appropriate disclosure of the deal. More importantly, even after newspaper reports had put out rather price sensitive information about the investment, Reliance did not bother to either clarify or to issue a statement on this subject. The deal had led to a sharp spike in the stock price. The penalty amount is quite small at Rs30 lakhs and is payable with immediate effect. However, the size of the penalty is quite paltry and could be more as a deterrent measure.