The Securities and Exchange Board of India (Sebi) on Friday banned Reliance Industries Ltd (RIL) and 12 others from equity derivatives trading for one year and directed RIL to disgorge nearly Rs 1,000 crore for alleged fraudulent trading in a 10-year-old case.
The ban, in effect from Friday, relates to alleged fraudulent trading in the Futures and Options (F&O), or derivatives, space in the securities of RIL's former listed subsidiary Reliance Petroleum (RPL) – now merged with the listed parent firm.
A stock goes banned in F&O when its derivative contracts cross 95 per cent of the market-wide position limit (MWPL).
The Mukesh Ambani-led RIL has been asked to pay Rs 447 crore, which along with an annual interest of 12 percent since November 29, 2007, taking the total disgorgement liability for the company to nearly Rs 1,000 crore. It has been asked to pay the amount in 45 days.
The Sebi order, passed by whole-time Member G. Mahalingam, said RIL and 12 other entities have been prohibited from dealing in the "equity derivatives in the F&O segment of stock exchanges, directly or indirectly".
"I am inclined to pass certain directions against the notices in order to protect the interest of the investors and reinstill their faith in the regulatory system. The notices may, however, square off or close out their existing open positions."
RIL in a statement said it would appeal against SEBI's decision. The company said it had full confidence in the judicial process and proposed to vigorously exercise all options available to challenge the untenable findings in the order.
It said the trades in RPL shares were genuine and the regulator appears to have misconstrued the true nature of the transactions.
RIL remains confident of fully justifying the veracity of the transactions and vindicating its stand, the statement added.