Mukesh Ambani and Reliance Industries fined Rs 40 crore by SEBI in 13 years old Case.

SEBI on Friday 02^nd Feb 2021 imposed a fine of Rs. 25 crores on Reliance Industries and Rs 15 crore on Chairman, Mukesh Ambani which means New year begins with total Rs 40 Crore penalty to Mukesh Ambani. SEBI conducted the Investigation related to the trading in the script of Reliance Petroleum Limited (RPL), which merged with RIL in 2009. Mukesh Ambani’s firm and certain entities were ordered in 2017 by market regulator to discharge over Rs 447 crore in the RPL case.

The capital markets regulator, Securities and Exchange Board of India (SEBI), in a 95-page order, said that being a Managing Director of RIL, he was responsible for the manipulative activities of the firm. SEBI didn’t stop here, in fact SEBI has also imposed fine of Rs 20 crore on Navi Mumbai SEZ and Rs 10 crore on Mumbai SEZ. The Board of RIL in March of 2007 had inter alia approved the operating plan for the year 2007-08 and resource requirements for the next two years, approximately Rs. 87,000 crores. After this, RIL made a decision of selling around 5% of its shareholding in RPL.

After this on behalf of RIL, RIL appointed 12 agents, between October 2007 and November 2007 to execute transactions in November 2007 RPL Futures (settlement period 29^th November 2007. Thereafter those 12 agents appointed by RIL took short positions in the F&O Segment, whereas RIL undertook transactions in RPL shares in Cash Segment. Meanwhile SEBI noted that RIL’s short position in F&O segment was way more than proposed sale of shares in Cash Segment. According to sources RIL sold a total of 2.23 crore shares in Cash Segment during the last 10 minutes of trading resulting in fall in prices of RPL shares on 29^th November 2007, 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. And at the end according to SEBI all the profits were transferred by the agents to RIL as per prior agreement.

Undue profits

According to statement made by SEBI, 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.