RIL’s Appeal Against Sebi Dismissed

The Securities Appellate Tribunal (SAT) has dismissed an appeal by Reliance Industries Ltd (RIL) against market regulator the Securities and Exchange Board of India (Sebi), which had rejected the company's plea for allowing proceeding in an insider trading case involving shares of Reliance Petroleum Ltd (RPL) in 2007.

The SAT order said that in view of the section 15JB(4) of the Sebi Act, which was passed with retrospective effect and now bars any appeal against any order under consent proceedings, it had no option but to dismiss RIL's appeal.

The case relates to an alleged act of insider trading in RPL by RIL just before its merger with the latter. Sebi probe revealed that RIL had created a short position in RPL and sold about 20 crore shares (4.1%) of RPL in the cash segment. This helped RIL make a profit of Rs 513 crore in its short position and a total profit of Rs 3.8 crore after taking into consideration the losses it suffered by selling RPL shares in the cash segment.

Sebi had issued a show cause notice to RIL regarding the alleged insider trading. Following the notice, RIL moved a consent application in Sebi, which at that time, had allowed the consenting party to pay a penalty and settle the charges.

However, Sebi changed the rules governing consent procedures with retrospective effect.

According to the new rules, major securities related violations like insider trading cannot be settled through the consent process. Following this rule, Sebi rejected RIL's consent application. It also fined RIL Rs 11 crore for the alleged insider trading charge.