Reliance barred from trading futures for a year

Reliance Industries said it would appeal against the SEBI judgement

Billionaire Mukesh Ambani’s Reliance Industries Ltd. has been barred from trading futures and options on India’s equity markets for a year after being found guilty of fraudulent activity by the market regulator.

The Securities and Exchange Board of India said Reliance, along with 12 unlisted trading houses it used, carried out unlawful transactions in shares of its former unit Reliance Petroleum Ltd. in late 2007. The regulator ordered the companies to return gains of Rs4.47 billion (Dh250.8 billion) plus interest, according to an order on its website Friday.

“This is not a normal case of price manipulation or volume manipulation,” SEBI’s whole time member G. Mahalingam said in the order. “This is an unique strategy of “manipulating the settlement price in one market to gain across the volumes accumulated in the other market.”

Reliance Industries said Friday it will appeal the judgement as it believes the trades in Reliance Petroleum shares were genuine and carried out in the interest of its shareholders.

“SEBI appears to have misconstrued the true nature of the transactions and imposed unjustifiable sanctions,” the company said.

Payment deadline

The Securities and Exchange Board ordered Reliance Industries to pay the stipulated amount within 45 days with interest at 12 per cent a year starting in November 2007. The total including interest is almost Rs10 billion, according to Bloomberg calculations.

According to the order, Reliance’s board approved the sale of 5 per cent of its stake in Reliance Petroleum in March 2007. In November, Reliance colluded with 12 small companies to take “substantial positions” in that month’s futures contract of Reliance Petroleum.