Under Section 15-I of SEBI Act, 1992 R/W Rule 5 of SEBI (Procedure of holding inquiry and imposing penalties) Rules, 1995. Under this an investigation into the trading in the scrip of Reliance Petroleum Limited (now known as Reliance Industries Limited) for the period November 1, 2007 to November 29, 2007 (hereinafter referred to as the ‘Investigation Period’) to ascertain whether there was any violation of the provisions of SEBI Act, and various rules made there under.It was found that there was manipulation during the sale and purchase of Reliance Petroluem Limited shares in the cash and the futures segments in November 2007.
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.SEBI said that any manipulation in the volume or price of securities always erodes investor confidence in the market when investors find themselves at the receiving end of market manipulators.”RIL has entered into a scheme of manipulative trades in respect of the sale of 5% of RIL stake in RPL. However, before undertaking sale transactionsin the Cash Segment, RIL fraudulently booked large short positions in the RPL November Futures through 12 Agents with whom it had entered into an agreement to circumvent position limits for a commission payment.
As a result, RIL fraudulently cornered nearly 93%of open interest in RPL November Futures, when the said 12 Agents took short positions in F&O Segment on its behalf.The funding for the margin payments by the said Agents was provided by Noticee-3 and Noticee-4. A common person connected with RIL had placed orders in the Cash Segment on behalf of RIL and in the F&O segment on behalf of the Agents”Managing Director Mr Mukesh Ambani was responsible for all such activities.”I am of the view that Noticee-2(Ambani),being the Managing Director of the RIL,cannot absolve himself and plead ignorance about the entire scheme of manipulative transactions undertaken for the benefit of RIL in the shares of RPL in the Cash and F&O Segment.
Therefore, I find that Noticee-2(Ambani) was liable for the actions of RIL resulting in violations of PFUTP Regulations, 2003 and SEBI Circular.Therefore, I find that Noticee-2 has violated the provisions of Regulations 3(a), (b), (c), (d) and Regulations 4(1), 4(2) (d), (e) of PFUTP Regulations, 2003 and SEBI Circular no. SMDRP/DC/CIR-10/01 dated November 02, 2001″, observed the Adjudicating Officer BJ Dilip in a 95-page order.Penalty on Reliance Industries Limited Rs. 25,00,00,000, Shri Mukesh D. Ambani Rs. 15,00,00,000, Navi Mumbai SEZ Pvt. Ltd. Rs. 20,00,00,000, Mumbai SEZ Ltd. Rs. 10,00,00,000 to be paid within 45 days of the order.
In case of non payment within the time period recovery proceedings may be initiated under Section 28A of the SEBI Act for realization of the said amount of penalty along with interest thereon, inter alia, by attachment and sale of movable and immovable properties.