Mumbai, NFAPost: Stock Exchange Board of India (SEBI)has fined Reliance Industries, Mukesh Ambani and two other entities a total of Rs 70 crore for alleged manipulative trading in the shares of Reliance Petroleum – which was merged with RIL in 2009- in a case that dates back to 2007
Sebi, in its long 95-page order, said 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.
Fines of Rs 25 crore and Rs 15 crore have been imposed on Reliance Industries Ltd (RIL) and Ambani, respectively. Besides, Navi Mumbai SEZ Pvt Ltd has been asked to pay a penalty of Rs 20 crore and Mumbai SEZ Ltd has been directed to pay Rs 10 crore.
The case pertains to sale and purchase of RPL shares in the cash and the futures segments in November 2007. This followed RIL’s decision in March 2007 to sell 4.1 per cent stake in RPL, a listed subsidiary that was later merged with RIL in 2009.
“As a result, RIL fraudulently cornered nearly 93 per cent of open interest in RPL November Futures, when the said 12 agents took short positions in F&O Segment on its behalf,” the order said. The funding for the margin payments by the agents was provided by Navi Mumbai SEZ Pvt Ltd and Mumbai SEZ Ltd, it added.
A common person connected with RIL had placed orders in the cash segment on behalf of RIL and in the F&O segment on behalf of the agents. On the date of settlement of RPL November Futures, i.e., on November 29, 2007, RIL sold 1.95 crore RPL shares on NSE cash segment in the last 10 minutes of trading resulting in fall in the prices on the cash segment, which artificially depressed the settlement price of RPL November Futures.
This resulted in profits on the huge short positions held by the agents in RPL November Futures and the said profits were transferred back to RIL by the agents as per prior agreement. The above strategy undertaken by RIL has resulted in manipulation of settlement price of RPL November Futures and prices of RPL shares in the cash segment.
Regarding Ambani, the order said that being the RIL managing director, he was responsible for the manipulative activities of RIL.