GG News Bureau
New Delhi, 5th Dec. The Securities Appellate Tribunal (SAT) has overturned the penalty imposed by Sebi on Mukesh Ambani, Chairman of Reliance Industries Ltd, and two other entities.
The penalty was related to alleged manipulative trading in the shares of Reliance Petroleum Ltd (RPL) in November 2007.
The entities appealed against Sebi’s order in January 2021, and the SAT ruled in their favor. In January 2021, Sebi fined Reliance Industries Ltd (RIL) Rs 25 crore, Mukesh Ambani Rs 15 crore, Navi Mumbai SEZ Pvt Ltd Rs 20 crore, and Mumbai SEZ Ltd Rs 10 crore in the RPL case.
Navi Mumbai SEZ and Mumbai SEZ are promoted by Anand Jain, who was once associated with the Reliance Group. The SAT’s 87-page order quashed Sebi’s 2021 order against Mukesh Ambani, Navi Mumbai SEZ, and Mumbai SEZ.
The tribunal also directed Sebi to return the fine amount if it had been deposited by the entities. The case involves the sale and purchase of RPL shares in November 2007.
RIL had decided to sell around 5% stake in RPL in March 2007, and RPL was later merged with RIL in 2009. The tribunal stated that RIL’s board had authorized two individuals to decide on the disinvestment.
It also noted that the Managing Director cannot be held responsible for every alleged violation of the law by corporate entities.
The tribunal concluded that there was clear evidence that the impugned trades were carried out by two senior officials without the knowledge of Mukesh Ambani. Sebi failed to prove his involvement in the trades.
Regarding RIL, the tribunal dismissed the company’s appeal against Sebi’s order in March 2017, which directed RIL and other entities to disgorge over Rs 447 crore in the RPL case.
Sebi’s January 2021 order stated that RIL appointed 12 agents to undertake transactions in RPL Futures in November 2007.
These agents took short positions in the Futures and Options (F&O) segment on behalf of the company, while the company undertook transactions in RPL shares in the cash segment.
Sebi alleged that RIL violated PFUTP rules by engaging in a well-planned operation with its agents to earn undue profits from the sale of RPL shares in both the cash and F&O segments. The regulator also claimed that the company manipulated the settlement price of RPL Futures contract by dumping a large number of RPL shares in the cash segment during the last 10 minutes of trading on November 29, 2007.
Sebi stated that the fraudulent trades affected the price of RPL securities in both cash and F&O segments and harmed the interests of other investors.
It was alleged that Navi Mumbai SEZ and Mumbai SEZ financed the manipulation scheme by funding the 12 entities.
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