Mukesh Ambani fined for 'manipulative trades'

Mukesh Ambani fined for 'manipulative trades'


ecurities and Exchange Board of India (SEBI) responsible for regulation of markets, on Friday penalised Reliance Industries, Mukesh Ambani and two other entities a total of 70 crore rupees. The company has been accused of manipulative trading in shares of Reliance petroleum which was incorporated in RIL in 2009 in a case that dates back to 2007. Sebi issued a 95 page order which declared that in November 2007, RIL and several other entities associated with it simultaneously traded in RPL shares in cash and derivative segments to gain profit from it.

Sebi imposed a penalty of Rs 25 crore on RIL, 20 crore on Navi Mumbai SEZ and Rs 10 crore on Mumbai SEZ. While the company's chairman and managing director Mukesh Ambani has been ambushed by a fine of 15 crore. The order clearly asserted, "any manipulation in volume and price of securities always stumbles the confidence in the market when the market manipulations are directed towards their end."

RIL opted for silence on Sebi order till Friday. The regulatory order of Friday highlighted that between October and November 2007, 'RIL intentionally appointed 12 agents' to monitor transactions on the company's behalf in the RPL derivatives contract. It further brought out that these 12 agents took short positions in derivative segments in the name of RIL, while the company conducted trading in RPL shares in cash segments.

"From November 15, 2007 onwards, the short position of RIL in the derivative segment constantly surpassed the proposed sales of shares in cash segments. RIL sold a total of 2.25 RPL shares as of November 29, 2007 during the last 10 minutes of trading which resulted in a descent in prices of RPL shares, which indeed lowered the RPL November futures. RIL's outstanding stand at 7.97 crore in the derivative segment was the result of cash settlement at this depressed price, which caused profits at short positions. The profits were then transferred to agents as per the agreement," the order described. A middleman connected to both RIL and agents placed orders on behalf of RIL in the cash segment and in derivative segments on behalf of agents.

The margin payments to 12 agents was funded by Navi Mumbai SEZ and Mumbai SEZ, the Sebi order added. The order alleged the CMD of RIL, Mukesh Ambani as responsible head behind this fraudulent and manipulative activities of RIL.