Sebi lets off Reliance Petroinvestments in IPCL insider case

NEW DELHI: Markets regulator Sebi has let off Mukesh Ambani-led RIL Group’s Reliance Petroinvestments Ltd (RPIL) in an almost 9year-old alleged insider trading case involving shares of the erstwhile IPCL on lack of evidence to establish prior access to sensitive information.

Interestingly, Sebi had earlier in May 2013 imposed a penalty of ` 11 crore on RPIL in the same case, but the order was later set aside by the Securities Appellate Tribunal in December last year and the regulator was asked to look afresh into the case and pass another order within three months.

After looking into the entire case all over again, Sebi in its latest order has said 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firm RIL were ‘insider’ “in absence of any evidence by the Investigating Authority to establish the access of UPSI (Unpublished Price

Sensitive Information)... while trading in the scrip of IPCL”. As a result, “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.

Once a subsidiary of Reliance Industries Ltd (RIL), IPCL used to be a separately-listed entity of the group, but was later merged with RIL and delisted from the stock exchanges.

IPCL originally used to be a government-owned entity and was sold to RIL group during a disinvestment exercise.

Mukesh Ambani was Chairman of IPCL as well as Chairman and MD of RIL during the period under review, thus putting both the companies under the same management while RPIL held more than one-third of total voting power of IPCL at that time.

Also, RIL held the entire share capital of RPIL through two wholly-owned subsidiaries.

The investigation report has observed that RPIL had not The investigation report has observed that RPIL had not dealt in the shares of IPCL during June 9, 2006 to February 26, 2007, but all of a sudden started buying the shares of

IPCL from February 27, 2007 i.e. just before both the announcements of merger of IPCL with RIL and declaration of dividend.

RPIL submitted that pursuant to a share purchase agreement and open offer, it held 46 per cent shares in IPCL.

It has regularly done creeping acquisitions in the shares of IPCL post 2002 and purchased about 12 lakh shares of IPCL in May-June 2006.

The acquisition of IPCL shares by RPIL was financed by RVL through an interest-free loan. RVL is a wholly-owned subsidiary of RIL.