Markets regulator Sebi fined Reliance Industries, its main promoter Mukesh Ambani and two other entities a total of £7 million for alleged manipulative trading in the shares of Reliance Petroleum - which has since been merged with RIL - in a case that dates back to 2007. Sebi, in its 95-page order, said that in November 2007, RIL and several other entities closely associated with it, simultaneously traded in RPL in the cash and derivatives segments to profit from it. RPL was merged with RIL in 2009.
Sebi imposed a fine of £2.5 million on RIL, £1.5 million on Ambani, the company’s chairman & managing director, £2 million on Navi Mumbai SEZ and £1 million on Mumbai SEZ. The order said that “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”.
RIL had not commented on the Sebi order. The regulatory order said that between October and November 2007, ‘RIL admittedly appointed 12 agents’ to undertake transactions in RPL derivative contracts on its behalf. During November 2007, these 12 agents took short positions in the derivatives segment on behalf of RIL, while the company traded in RPL shares in the cash segment.
“From November 15, 2007 onwards, RIL’s short position in the derivatives segment constantly exceeded the proposed sale of shares in the cash segment. On November 29, 2007, RIL sold a total of 22.5 million RPL shares in the cash segment during the last 10 minutes of trading resulting in a fall in prices of RPL shares, which also lowered the settlement price of RPL November Futures.
RIL’s entire outstanding position of £97,000 in the derivatives segment was cash settled at this depressed settlement price, resulting in profits on the said short positions. The said profits were transferred by the agents to RIL as per a prior agreement,” the order noted. “A common person connected with RIL had placed orders in the cash segment on behalf of RIL and in the derivatives segment on behalf of the agents.” The funding for the margin payments for the 12 agents was provided by Navi Mumbai SEZ and Mumbai SEZ, it added. Sebi order also said that being the CMD of RIL, Ambani was “responsible for the manipulative activities of RIL”.
Earlier, on March 24, 2017, Sebi had ordered RIL and some of its associated entities to disgorge nearly £45 million plus interest on it (which could work out to over £100 million) in the same case. In November 2020, the Securities Appellate Tribunal (SAT) had dismissed the company’s appeal against the order. RIL was to challenge SAT’s order in the Supreme Court. In its March 2017 order, Sebi had also prohibited RIL from dealing in equity derivatives for one year.
