MUMBAI (Reuters) – The Indian markets watchdog on Friday fined Reliance Industries 250 million rupees ($ 3.42 million) and its chairman Mukesh Ambani 150 million rupees for what he called fraudulent transactions during the sale of a stake in a subsidiary in 2007.
The Securities and Exchange Board of India (SEBI) alleged that the oil-telecom conglomerate took short derivative positions in separately listed Reliance Petroleum shares in 2007 through third parties before selling a 5% stake in the company.
Reliance did not immediately respond to requests for the company’s comment and President Ambani’s comment.
The latest move follows a 2017 order ordering Reliance Industries to cede around 4.5 billion rupees plus 12% annual interest in what the regulator has called illegal gains from the deal. It also banned Reliance and certain third parties from trading derivatives for a year.
At the time, Reliance Industries said the transactions SEBI reviewed were “genuine and good faith transactions” and that SEBI had “misinterpreted the true nature of the transactions and imposed unjustifiable penalties”.
The group is awaiting a Supreme Court appeal hearing against the 2017 ruling.
“With this sanction, SEBI is showing its teeth,” Shriram Subramanian, corporate governance expert and founder of voting advisory firm InGovern, said of Friday’s decision.
“This manipulation scheme was deceptive and against the interests of the securities markets,” SEBI said in Friday’s 95-page order, adding that Ambani was responsible for the company’s activities.
($ 1 = 73.1200 Indian rupees)
Reporting by Abhirup Roy Editing by John Stonestreet and David Goodman