SEBI bars Reliance Industries from equity derivative trades in F&O for 1 year
NEW DELHI: The Securities and Exchange Board of India (SEBI) on Friday barred Reliance IndustriesBSE 0.95 % Ltd (RIL), the country’s second most valued firm, and 12 other entities from dealing in equity derivatives futures and options segment for a period of one year, directly or indirectly, for allegedly indulging in fraudulent trades in Reliance PetroleumBSE 0.34 % in 2007.
The capital markets regulator has also directed RIL to disgorge Rs 447.27 crore along with 12% interest from November 29, 2007 onwards till the date of payment, within 45 days from the date of the order.
SEBI has allowed RIL and the other entities to square off or close out their existing open positions. Reacting to the decision, Reliance said it plans to challenge the order in the Securities Appellate Tribunal. ” SEBI appears to have misconstrued the true nature of the transactions and imposed unjustifiable sanctions,” a Reliance spokesperson said in an emailed statement.
“We remain confident of fully justifying the veracity of the transactions and vindicating our stand. We have full confidence in the judicial process and we propose to vigorously exercise all options available to us to challenge the untenable findings in the order.”
“In view of the fact that Noticee No.1 (Reliance Industries) has made unlawful gains of Rs 513/-crore, which could not have been made but for the fraudulent and manipulative strategy/pattern adopted by them, I am inclined to direct disgorgement of the unlawful gains made by Noticee No.1,” SEBI whole-time member G Mahalingam said in his order.
SEBI calculated Rs 513 crore by taking into account the net short positions in derivatives for all the days the 12 entities maintained during November 2007.
The regulator said Reliance Industries, by employing 12 entities to take separate position limits of open interest on its behalf, by executing separate agreements with each one of them and cornering 93.63% of the November stock futures of RPL, has acted in a fraudulent manner. It cannot be held to be a mere breach of position limits by the clients attracting penalty under the exchange circulars, SEBI said.
The regulator said on the basis of the analysis of the trading strategy adopted by RIL in the cash market during the month of November 2007, and specifically on November 29, 2007 — the expiry day of the November Futures of RPL — there has been a manipulation of the last half an hour settlement price.
Reliance Industries had submitted before SEBI that the liquidation of 5% stake was decided and there was no outer time fixed for liquidation. Being guided by the analysts’ reports and the price trends of the scrip, it decided to start the sale in November 2007.
Before the sale in the cash segment started, RIL booked positions in the F&O segment to the extent of 9.92 crore shares by entering into agreements with 12 entities for a commission payment.
“Entrusting a common person to carry out the trades in both cash and F&O segment was the other key factor in the whole operation. Finally when the price dipped on November 29, the entire F&O open positions to the extent of 7.97 crore shares was allowed to expire. In the meanwhile, 1.95 crore shares were also liquidated in the cash segment.
“This is not a normal case of price manipulation or volume manipulation. This is a case of a unique strategy of per se not manipulating the price or volume in a single market, but manipulating the settlement price in one market to gain across the volumes accumulated in the other market. The actual manipulation has happened with respect to the convergence price of the spot with the futures,” SEBI said.
Reliance Industries through its written and oral submissions before SEBI referred to its actions as ‘hedging’ to justify its scheme.
“The strategy of ‘hedging’, put forward as a defence by Noticee No.1(RIL) is nothing but a mirage,” Sebi member G Mahalingam said. “While Noticee No.1 (RIL) has sought to depict a strategy of hedging, when one takes a closer look at what was actually done or intended to be done, the facade of hedge wanes off and exposes the hidden motive or strategy of speculation… I find that Noticee No. 1 was not genuinely hedging the risk but was aiming to reap huge speculative profits by cornering futures positions and playing a fraud on the general investors and the market. This would amount to a well-planned, fraudulent and manipulative trading scheme in terms of the SEBI (PFUTP) Regulations, 2003.”
To know more about us or our services, kindly visit www.buildcaps.com
Buildcaps Management Services
Archives
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023
- March 2023
- February 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
Categories
- Best Investment Advisor in India
- Business
- Commodity Market
- Currency
- Equity Market
- FII based calls
- Foreign Markets
- Genuine stock tips provider
- Intraday trading tips
- Intraday trading tips & Strategies
- Investment adviser
- Investments
- IT Industry
- Most accurate stock tips provider
- News
- NSE F&O
- Operator based calls
- Politics
- Portfolio Management Services
- promotions
- SEBI Registered advisory company
- Stock Market
- Uncategorized
Calender
M | T | W | T | F | S | S |
---|---|---|---|---|---|---|
1 | 2 | 3 | ||||
4 | 5 | 6 | 7 | 8 | 9 | 10 |
11 | 12 | 13 | 14 | 15 | 16 | 17 |
18 | 19 | 20 | 21 | 22 | 23 | 24 |
25 | 26 | 27 | 28 | 29 | 30 |