Sebi to pass final order on RIL case soon

The Securities and Exchange Board of India (Sebi) has concluded its final hearing in the matter of Reliance Industries and Reliance Petroleum merger, sources have said.

In the matter spanning for eight years the regulator would look to pass a final order in the matter under the charges of Fraudulent and Unfair Trade Practices (FUTP).

The regulator was probing the company for illicit gains made during the merger of Reliance Petroleum and Reliance Industries in 2007. Sources privy to the matter also say that the company made its final submission in the matter.

“The final hearing in the matter was conducted by the whole time member Rajeev Kumar Agarwal. The regulator is in the process of examining the final submission made by the company, based on that the final order would be passed,” said a source.

An email query to RIL did not elicit a response.

It is expected that from the date of the final hearing that is 24th June the regulator would pass the order within a month.

Sebi while passing a final order would be trying to draw a balance in awarding a penalty amount.

It could be to the tune of Rs 25 crore as the regulator could face opposition in substantiating illicit gains. Sebi provisions entail that the penalty could be Rs 25 crore or three times of the illicit gains.

It is a given that once the final order is passed the company would approach the Securities Appellate Tribunal (SAT) on the order.

RIL had earlier applied for a consent mechanism, which would have allowed the company to settle charges without admission or denial of guilt.

However, the regulator rejected the consent application. RIL then filed an appeal before the Securities Appellate Tribunal (SAT) challenging the Sebi order.

The SAT order said Sebi investigations have proved that RIL, in connivance with other entities related/connected to it, took short positions in the futures and options segments of the National Stock Exchange in the Reliance Petroleum scrip and sold around 200 million shares, thereby making an illegal gain of Rs 513.12 crore.

SAT Presiding Officer J P Devadhar said the dispute was rejected as it was not “consentable and maintainable”. Sebi had tweaked its consent norms in 2012 and made them stricter following the Sebi ordinance which gave additional powers to the regulator.

The Sebi consent norms currently exclude serious offences, such as insider trading, from the settlement process.