India’s markets watchdog fined Reliance Industries Ltd (RIL) $3.42 million and its chairman Mukesh Ambani $2.05 million for what it said were fraudulent trades while selling a stake in a subsidiary in 2007.
The Securities and Exchange Board of India (SEBI) alleged that the oil-to-telecoms conglomerate used manipulative trading in the shares of Reliance Petroleum (RPL), which was merged with Reliance Industries in 2007.
SEBI, in its 95-page order, said in November 2007, RIL and several other entities closely associated with it simultaneously traded in RPL in the cash and derivatives segments to profit from it. The order 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.”
The latest ruling follows a 2017 order for Reliance Industries to surrender about $0.615 billion plus 12 percent annual interest for what the regulator said were unlawful gains from that deal. It also barred Reliance and some third parties from trading in derivatives for one year.
At the time, Reliance Industries said the trades examined by SEBI were “genuine and bona fide transactions” and that SEBI had “misconstrued the true nature of the transactions and imposed unjustifiable sanctions”. The group is awaiting a Supreme Court appeal hearing against the 2017 ruling.
Reliance is one of the most profitable companies in India and is engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications businesses. It is the largest publicly traded company in India by market capitalization. The company is ranked 96th on the Fortune Global 500 list of the world’s biggest corporations as of 2020. It’s owner, Mr. Ambani is the second richest man in Asia.