Sebi refuses to consider RIL plea to settle insider trading charges

Capital market regulator Securities and Exchange Board of India ( Sebi ) has declined to consider a plea filed by Reliance Industries RIL ) to settle insider trading allegations through a so-called consent process, leaving the decision to the appellate authority, Securities Appellate Tribunal (SAT).On Tuesday, Darius Khambatta, advocate general of Maharashtra, told SAT that Sebi was not inclined to enter into consent negotiations with RIL. SAT will hear the case on November 11. RIL has challenged Sebi's decision not to resolve the case through the consent mechanism, in which the entity facing charges can agree to pay an amount, known as the consent fee, without admitting guilt.In May 2012, Sebi tightened the norms for settlement through consent, as a result of which insider trading charges cannot be resolved through this route. Reliance says its plea to Sebi to adopt the consent route was made before these changes were made and ought to be considered. Last week SAT had asked Sebi to consider RIL's plea. "Now the matter will come up for regular hearing and the tribunal will decide on the matter," said Janak Dwarkadas, a senior counsel representing RIL.Among other matters, SAT will have to decide whether Sebi's decision not to take consent route can be challenged before it, i.e, if RIL's plea is maintainable. According to submissions made by Sebi's counsel, RIL is alleged to have made unlawful gains of Rs 5130000000 by selling shares of Reliance petroleum, the company's erstwhile subsidiary.RIL had sold a 4.1% stake in the company in 2007. To prevent a slump in the price of the stock, the shares were sold first in the futures market and later in the spot market , actions that Sebi alleges amount to insider trading. Besides the legal wrangle over the validity of the consent route, RIL has also challenged the showcause notice issued by Sebi in December 2010 saying it was not given adequate access to documents on which the notice was based.