In its order dated January 1, SEBI said Reliance and its agents operated to allegedly earn undue profits from the sale of shares in Reliance Petroleum Ltd.
India’s market regulator, the Securities and Exchange Board of India (SEBI), has ordered billionaire Mukesh Ambani and his conglomerate Reliance Industries Ltd. to pay a combined penalty of Rs 400 million ($5.5 million) for allegedly violating share-trading rules about 13 years ago.
In its order dated January 1, SEBI said Reliance and its agents operated to allegedly earn undue profits from the sale of shares in Reliance Petroleum Ltd. (RPL), a former unit, in both the cash and futures markets. It added that Reliance Industries needs to pay 250 million rupees and Ambani, the chairman, is liable for the alleged manipulative trading.
In 2017, after years of investigation, SEBI found that Reliance, along with 12 unlisted trading houses, carried out unlawful transactions in the shares of Reliance Petroleum. According to SEBI, they bought stock between March and November of 2007, and then the company took short positions — bets that the share price would fall — in November futures before starting to sell the stock in order to push down the price.
SEBI, in the same year, told the companies to return gains of 4.47 billion rupees plus interest and banned Reliance from trading futures and options on India’s equity markets for a year. Saying they were “unjustifiable sanctions” on genuine transactions carried out in the interest of shareholders, Reliance had appealed against the order.
“RIL had entered into a well-planned operation with its Agents to corner the open interest in the RPL Futures and to earn undue profits from the sale of RPL shares in both cash & futures segments and to dump large number of RPL shares in the cash segment during the last ten minutes of trading on the settlement day resulting in a fall in the settlement price,” the regulator said.
“The execution of the aforesaid fraudulent trades affected the price of the RPL securities in both Cash and F&O Segments and harmed the interests of other investors,” it added.
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