On Friday, India’s market regulator fined Reliance Industries 250 million rupees ($3.42 million) and its chairman, Mukesh Ambani, 150 million rupees for what it claimed were illegal trades while selling a subsidiary stake in 2007.
The Securities and Exchange Board of India (SEBI) alleged that in 2007, through third parties, the oil-to-telecoms conglomerate took derivative short positions in shares of separately listed Reliance Petroleum before selling a 5 percent stake in the firm.
Reliance did not respond immediately to Chairman Ambani’s requests for company comment and comment.
A 2017 order for Reliance Industries to surrender about 4.5 billion rupees plus 12 % yearly interest for what the regulator said were illegal gains from that contract follows the new decision. It also barred Reliance and some third parties from dealing for one year in derivatives.
At the same time, Reliance Industries reported that the transactions reviewed by SEBI were “genuine and bona fide transactions” and that SEBI “misconstrued the true nature of the transactions and imposed unjustifiable sanctions”
A Supreme Court appeal hearing against the 2017 ruling is awaiting the party.
“By this penalty, SEBI is showing its teeth,” Shriram Subramanian, an expert in corporate governance and founder of proxy advisory company InGovern, said of the ruling on Friday.
That exploitation scheme was deceptive and against the interest of the securities markets, SEBI said in Friday’s 95-page order. In addition, Ambani took the responsibility of the company’s activities.