The Securities and Exchange Board of India has issued a disgorgement order of ₹447 crore against Reliance Industries Ltd. on charges of insider trading in Reliance Petroleum Ltd. (RPL) in 2007.
In a 54-page order on Friday, the regulator said RIL should disgorge an amount of ₹447.27 crore along with interest at 12% per annum from November 29, 2007, till the date of payment.
SEBI has also barred RIL, along with 12 other entities, from dealing — directly or indirectly — in the equity derivatives market for a period of one year from the date of the order. However, they have been allowed to square off or close out any existing positions.
According to SEBI’s investigation, RIL made unlawful gains amounting to ₹513 crore “which could not have been made but for the fraudulent and manipulative strategy/pattern adopted by them.”
RIL said it would appeal the SEBI order.
The case dates back to March 2007 when RIL decided to raise resources by selling about 5% of its holdings in RPL. While RIL was dealing in the shares of RPL in the cash segment, it enlisted 12 entities as agents to operate on its behalf in the derivatives segment. These entities took substantial short positions in the derivatives segment. All orders were placed by Sandeep Agarwal, an employee of a subsidiary of RIL. As per SEBI, the trades in the cash and derivatives segments were done so as to “bring down the price in the cash segment and consequently the derivatives segment of the RPL scrip” and make undue extraordinary profits.”
RIL, in its defence, has said that the strategy was adopted to “hedge the loss that it was expecting due to the impending sales in the cash segment by taking appropriate positions in the F&O segment.”
