On Monday, the Securities Appellate Tribunal (SAT) reversed the penalty imposed by the Securities and Exchange Board of India (SEBI) on Mukesh Ambani, Chairman of Reliance Industries Ltd, and two other entities. This ruling pertains to a case involving suspected manipulative trading in the shares of the former Reliance Petroleum Ltd (RPL) in November 2007. The entities had challenged SEBI\’s January 2021 order, which imposed fines of โน25 crore on Reliance Industries Ltd (RIL), โน15 crore on Mukesh Ambani, โน20 crore on Navi Mumbai SEZ Pvt Ltd, and โน10 crore on Mumbai SEZ Ltd in connection with the RPL case.
The tribunal\’s comprehensive 87-page decision nullified SEBI\’s 2021 order against Mukesh Ambani, Navi Mumbai SEZ, and Mumbai SEZ. Furthermore, it directed SEBI to reimburse any fines that these entities might have deposited. The case centered around the buying and selling of RPL shares in November 2007, following RIL\’s resolution in March 2007 to divest around a 5% stake in RPL, a listed subsidiary later merged with RIL in 2009.
The tribunal underscored that RIL\’s board had specifically authorized certain individuals to manage the disinvestment, clearing Ambani of any responsibility for alleged violations. It referenced evidence from board meetings, revealing that the contested trades were executed by two senior officials without Ambani\’s awareness. The tribunal rejected SEBI\’s inability to demonstrate Ambani\’s involvement in the transactions.
However, the tribunal upheld SEBI\’s order regarding RIL, rejecting the company\’s appeal. The contested order referred to SEBI\’s March 2017 directive for RIL and other entities to disgorge over โน447 crore in the RPL case. In January 2021, SEBI accused RIL of engaging in manipulative transactions in the November 2007 RPL Futures through 12 appointed agents. The order alleged that RIL violated Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules, orchestrating a carefully planned operation with its agents to benefit from RPL share sales in both cash and futures segments.
SEBI argued that RIL manipulated the settlement price of the November 2007 RPL Futures contract by offloading a substantial number of RPL shares in the cash segment during the last 10 minutes of trading on November 29, 2007. These purportedly fraudulent transactions impacted the prices of RPL securities in both segments, causing harm to the interests of other investors.
Furthermore, the regulator asserted that Navi Mumbai SEZ and Mumbai SEZ financed the manipulation scheme by providing funds to the 12 entities involved.
