Sebi fails to prove Reliance Petroinvestments’ IPCL insider role, drops charges

Market regulator Securities and Exchange Board of India (Sebi) has dropped charges of insider trading against Reliance Petroinvestments Ltd (RPL), a unit of Mukesh Ambani-led Reliance Industries Ltd (RIL).

The charges were dropped, as the almost 9-year-long probe failed to establish that RPL had access to sensitive inside information in the trading case involving shares of the erstwhile IPCL, the Sebi order said.

This is a reversal of Sebi's stance of May 2013 when the market regulator had imposed a fine of Rs 11 crore on RPIL in the same case, although the Securities Appellate Tribunal set aside the order in December last year and also asked the regulator to look afresh into the case and pass another order within three months.

Sebi in its latest order has said that after looking into the entire case all over again the entities under scanner were indeed related parties, but it could not conclude that Reliance Petroinvestments and its parent firm RIL were 'insider' "in absence of any evidence by the Investigating authority to establish the access of unpublished price sensitive information (UPPSI)... while trading in the scrip of IPCL".

"It can be concluded that the noticee (RPIL) has not violated provisions of... Prevention of Insider Trading Regulations" and were not liable to any monetary penalty, Sebi said in its 50-page order.

IPCL, once a government-owned entity, was sold to RIL group during a disinvestment exercise and remained a separately-listed entity of the RIL group, but was later merged with RIL and delisted from the stock exchanges.

Mukesh Ambani was chairman of IPCL as well as chairman and MD of RIL during the period, while RPIL held more than a third of the total voting power of IPCL at that time.

RIL in turn held the entire share capital of RPIL through two wholly-owned subsidiaries.

Sebi's adjudicating officer said that the entities - RPIL and RIL - were indeed related parties, but its investigations could not conclude that RPIL and RIL were insiders in the absence of any evidence by the investigating authority to establish they had access to unpublished price-sensitive information when they traded in IPCL shares.

Because of this, "it can be concluded that the noticee (RPIL) has not violated provisions of... Prevention of Insider Trading Regulations" and thus there was no fine.