Sebi slaps fine of ₹30 lakh on RIL and two of its officers

MUMBAIA : The Securities and Exchange Board of India (Sebi) fined Monday of 30 lakhs on Reliance Industries Ltd (RIL) and its two compliance officers for alleged violations of the Prohibition of Insider Trading (PIT) regulations.

The fine was jointly imposed on RIL and compliance officers —K. Sethuraman and Savithri Parekh.

The matter concerns the alleged lack of fair disclosure of unpublished price sensitive information (UPSI), in the case of Facebook’s 9.99% investment in RIL subsidiary Jio Platforms in April 2020.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 it. $43,574 million.

A text request sent to a RIL spokesperson was not immediately answered.

According to the regulator, the key issue was a March 24, 2020 news article published in the Financial Times, London, detailing the global tech giant’s impending investment.

Shortly after the news was released, RIL’s stock rose 15%, making it UPSI, the regulator listed in its order.

Usually, in the case of such news articles, the exchanges ask for clarification or the company itself provides clarification.

In this case, neither the exchanges have asked for clarification, nor has RIL itself sought clarification, the regulator held in its command.

“The listed entity may also confirm or deny any reported event or information to the exchange(s) on its own initiative,” Sebi said in his order.

The regulator’s adjudication officer (AO) ruled in her order that UPSI’s fair disclosures rest on two fundamental assumptions. One is that information that is UPSI must be veiled until it is made public. Second, if information is to be made public, it should be made public and not selective.

“One of the circumstances considered in the law is that if the UPSI is somehow selectively available to someone or made available in bits and pieces, such as rumors or press articles in newspapers, the law provides a mechanism by which the company can clarify the rumor or similar articles in newspapers. This is an important part of the task that the company should be tackling from a rumor verification perspective,” said Barnali Mukherjee, AO, Sebi in her assignment.

RIL, for its part, argued that exchanges did not ask for clarification and thus were not obliged to provide it.

However, Sebi said it is not convinced the company can waive its responsibility to verify a news article that appeared in the paper.

“When the UPSI parts subsequently became selectively available, the company waived its responsibility to verify and clean up the unverified information that was circulating,” Sebi said in the order.

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