MUMBAI : The Securities and Exchange Board of India (Sebi) on Monday imposed a penalty of ₹30 lakhs on Reliance Industries Ltd (RIL)and its two compliance officers for alleged violation of Prohibition of Insider Trading (PIT) regulations.
The penalty has been imposed jointly on RIL and compliance officers —K. Sethuraman and Savithri Parekh.
The matter pertains to so-called lack of fair disclosures of unpublished price sensitive information (UPSI), in the case of Facebook’s 9.99% investment in RIL subsidiary Jio Platforms in April 2020. The deal was worth ₹43, 574 crores.
A text query sent to a spokesperson for RIL was not answered immediately.
According to the regulator the key issue was a 24 March 2020 news article published in the Financial Times, London which detailed the impending investment from the global tech giant.
Soon after the news was published the RIL stock rallied 15%, which made it UPSI, the regulator held in its order.
Typically, in the cases of such news articles either the stock exchanges seek clarification or the company on its own issue a clarification.
In this case neither the exchanges sought clarification nor RIL clarified on its own, the regulator held in its order.
“The listed entity may on its own initiative also, confirm or deny any reported event or information to stock exchange(s),” said Sebi in its order.
The regulator’s adjudication officer (AO) in her order held that fair disclosures of UPSI stands on two fundamental premises. One that information which is UPSI should be enveloped until made public. Second that if information needs to be made public then it should be made public for all and not selectively.
“One of the circumstances contemplated in law is that if the UPSI is somehow selectively available to someone or is being made available in bits and pieces like rumours or press articles carried in newspapers, the law provides a mechanism where company can clarify on the rumour or such articles in newspapers. This forms a major part of the task that the company would need to address from rumour verification perspective,” said Barnali Mukherjee, AO, Sebi in her order.
RIL on its part argued that stock exchanges did not ask for clarification and thus they were not required to offer one.
However Sebi said that it is not convinced that the company can abdicate its responsibility to verify a news article that has appeared in the newspaper.
“When the bits of UPSI that then became selectively available the company abdicated its responsibility to verify and come clean on the unverified information that was floating around,” said Sebi in the order.