Ambani's Reliance Industries Fined By India Stock Regulator

Sebi arrived at the unlawful gain of Rs513 crore by considering the net short position that RIL and 12 other entities maintained while trading in the RPL stock in November 2007, ahead of a planned amalgamation of the firm with RIL. "Sebi appears to have misconstrued the true nature of the transaction and imposed unjustifiable sanctions", the RIL spokesperson said in an email.

In a 54-page order passed by Whole-Time Member G Mahalingam, RIL and 12 other entities have been prohibited from dealing in the "equity derivatives in the F&O segment of stock exchanges, directly or indirectly".

Reliance, the second most valuable firm in the country, will now have to pay a penalty of Rs 447.27 crore with 12% interest from November 2007, which amounts to almost Rs 1,300 crore, The Indian Express reported. The total penalty of RIL after adding interest comes close to Rs 1,300 crore.

RIL has said it will appeal against the order, which it needs to comply with in 45 days. The Mukesh Ambani-led company challenged the SEBI charges at the Securities Appellate Tribunal in December 2010. Subsequently, Sebi continued the investigation of its case and RIL and 12 other entitites presented their defence in January this year. The proceedings in the long-pending case were expedited in the past few months.

In a statement, Reliance Industries said it is in the process of consulting its legal advisers.

Furthermore, Sebi said RIL "manipulated" the F&O segment through 12 of its agents and allowed them to hold the contracts till the last day of expiry.

While Noticee No. 1 undertook the transactions in the cash segment of RPL in November 2007, it enlisted the services of Noticees No. 2 to 13 as agents to operate in its behalf in the futures segment of RPL. The case dates back to 10-years, to 2008, when Sebi had alleged violation of norms against RIL when it merged its unite with Reliance Petroleum (RPL) in 2007, the Financial Express reported. This move also impacted the price in the futures market, helping the front entities gain on their short positions. Mahalingam also said RIL made unlawful gains to the extent of Rs 513 crore.

  • Zachary Reyes