13 years of trading case & SEBI imposes Rs 40 crores fine on Reliance Industries

New Delhi, January 02: New year has brought a lot of hopes for businesses in India. But Reliance Industries’ Chairman Mukesh Ambani began his new year with a fine of Rs 15 crore on himself and Rs 25 crore on his telecom conglomerate for manipulative trading done in shares of Reliance Petroleum Limited in 2007. The capital markets regulator, Securities and Exchange Board of India, in its 95 page order, said that Mukesh Ambani being the Managing Director of RIL, was responsible for the manipulative activities of the firm. Along with the Mukesh Ambani and RIL, SEBI has also imposed fine of Rs 20 crore on Navi Mumbai SEZ and Rs 10 crore on Mumbai SEZ.

 

The investigation conducted by SEBI related to the trading in the scrip of Reliance Petroleum Limited, which merged with RIL in 2009. The Board of RIL had in March of 2007 inter alia approved the operating plan for the year 2007-08 and resource requirements for the next two years, approximately Rs. 87,000 crore. After this, RIL decided to sell around 5 per cent of its shareholding in RPL.

 

 

“Subsequently, RIL admittedly appointed 12 agents, between October 2007 to November 2007, to undertake transactions in the November 2007 RPL Futures (settlement period November 1- November 29, 2007) on its behalf,” the SEBI order said. It further added that the 12 agents appointed by RIL took short positions in the F&O Segment on behalf of RIL, while RIL undertook transactions in RPL shares in the cash segment.

 

Between the said period, SEBI noted that RIL’s short position in the F&O Segment constantly exceeded the proposed sale of shares in the Cash Segment. “On 29th November 2007, RIL sold a total of 2.25 crore shares in the Cash Segment during the last 10 minutes of trading resulting in fall in the prices of RPL shares, which also lowered the settlement price of RPL November Futures in the F&O Segment. RIL’s entire outstanding position of 7.97 crores in the F&O 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,” SEBI said.

 

SEBI further said that it observed that “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 order highlighted that the 12 entities earned a profit of Rs 513.12 crore in the derivatives segment of RPL during the month of November 2007.

 

The order also observed that the general investors were unaware that the entity behind the F&O segment trades was RIL. “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 said. Earlier in 2017, the market regulator had ordered Mukesh Ambani’s firm and certain other entities to disgorge over Rs 447 crore in the RPL case. Later in November of 2020, the Securities Appellate Tribunal (SAT) had dismissed the company’s appeal against the order.