SEBI slaps RIL with Rs. 447 crore disgorgement order over RPL

‘RIL made unlawful gains through fraudulent strategy’ The Securities and Exchange Board of India has issued a disgorgement order of Rs. 4470000000 against Reliance Industries Limited for insider trading in Reliance Petroleum Limited In a 54-page order on Friday, the regulator said RIL should disgorge an amount of Rs. 447.270000000 along with interest at 12% per annum from November 29, 2007, till the date of payment. SEBI has also barred RIL, and 12 other entities, from dealing — directly or indirectly — in the equity derivatives market for one year from the date of the order. They have been allowed to square off or close out any existing positions. According to SEBI’s investigation, RIL made unlawful gains amounting to Rs. 5130000000 “which could not have been made but for the fraudulent and manipulative strategy/pattern adopted by them.” RIL said the trades in RPL shares were “bonafide transactions” and added that it would appeal SEBI’s order. In March 2007, RIL decided to raise resources by selling about 5% of its holdings in RPL. While RIL was dealing in the shares of RPL in the cash segment, it enlisted 12 entities as agents to operate on its behalf in the derivatives segment. These entities took substantial short positions in the derivatives segment. All orders were placed by Sandeep Agarwal, an employee of a subsidiary of RIL. As per SEBI, trades in cash and derivatives segments were done so as to “bring down the price in the cash segment and consequently the derivatives segment of the RPL scrip” and make “undue extraordinary profits” on the open short positions.