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SEBI imposes fine of 15 crore on Mukesh Ambani for “manipulative trades”

The Securities and Exchange Board of India (SEBI) on Friday imposed fine of Rs. 15 crore on Mukesh Ambani and Rs. 25 crore on Reliance Industries Limited (RIL) for entering into a scheme of “manipulative trades” in 2007 respect of the sale of 5 percent of RIL stake in Reliance Petroleum Limited (RPL).

The market regulator found that Mukesh Ambani as the Managing Director of RIL was responsible for the manipulative activities of RIL.

The depressed settlement price due to manipulative trades resulted in profits on the said short positions which were then transferred by the agents back to RIL as per a prior agreement, the SEBI ruled.

“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 Notice-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”, Adjudicating Officer BJ Dilip said in a 95-page order.

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Companies, SEBI underscored, should exhibit highest standards of professionalism, transparency and good practices of corporate governance, which inspires confidence of the investors dealing in the capital markets.
Any attempt to deviate from such standards will not only erode the confidence of the investors but also affect the integrity of the markets, it said.

Such acts of manipulation have to be dealt sternly so as to dissuade manipulative activities in the capital markets, the SEBI ruled proceeding to impose fine on Ambani and RIL.

Two other entities, Navi Mumbai SEZ Pvt. Ltd. and Mumbai SEZ Ltd., which aided and abetted RIL by providing funds to one of the agents appointed by RIL, who in turn provided funds to other eleven agents for making the margin payments for the short positions in RPL November Futures, were also met with similar action by SEBI.

Navi Mumbai SEZ Pvt. Ltd was fined Rs. 20 crore while Mumbai SEZ was handed down fine of Rs. 10 crore.

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