SEBI has imposed a fine of Rs 25 crore on RIL and Rs 15 crore on Ambani
Recently, Mukesh Ambani has been fined by SEBI, read the story to know why? But before that, lets have a look at what SEBI is.
The Securities and Exchange Board of India(SEBI) is the regulator of the securities and commodity market in India owned by the Government of India. It was established on 12 April 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992.
SEBI is making the news as the market watchdog has fined Reliance Industries Ltd (RIL) and Mukesh Ambani, its Chairman & Managing Director along with two other entities. They have been fined for their alleged role in manipulative trades in Reliance Petroleum Ltd (RPL) in 2007.
The Imposed Fine :-
As per reports, SEBI has imposed a fine and directed to cough up to Rs 25 crore on RIL and Rs 15 crore on Ambani in the case involving the company which was later merged with RIL.
Other than these, Mumbai SEZ Ltd and Navi Mumbai SEZ Pvt Ltd have also been fined Rs 10 crore and Rs 20 crore respectively in penalties.
The trading of RPL shares in the cash and futures segments in November 2007, is the reason why penalties are imposed.
Illegal profits were made by manipulation of RPL’s share prices is the belied of SEBI and hence the parties have been penalized.
According to a PTI report, 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.
The 95 Page Order :-
In a 95-page order, SEBI’s Adjudicating Officer B J Dilip, opined that any manipulation in the price or volume of securities erodes investor confidence.
He noted in the order that “In the instant case, the general investors were not aware that the entity behind the above F&O segment transactions was RIL. The execution of the… fraudulent trades affected the price of the RPL securities in both cash and F&O segments and harmed the interests of other investors”.
“I am of the view that such acts of manipulation have to be dealt sternly so as to dissuade manipulative activities in the capital markets,” he further said while noting that manipulative trades affect the price discovery system itself.
SEBI ordered RIL and other entities on March 24, 2017, to disgorge over Rs 447 crore in the RPL trading case. The regulator’s appellate body, Securities Appellate Tribunal (SAT), dismissed the company’s appeal against the order in November 2020, the report further adds. RIL had said it will challenge the order in the Supreme Court.
SEBI in its earlier order had also prohibited RIL from trading equity derivatives in the F&O segment of the market for one year.
As per SEBI’s Friday order, RIL entered into a scheme of manipulative trades in respect of the sale of its stake in RPL. “It was 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 and futures segments and to dump large number of RPL shares in the cash segment during the last 10 minutes of trading on the settlement day resulting in a fall in the settlement price,” SEBI adjudicating officer BJ Dilip said in the 95-page order on Friday.
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