Consent order eludes RIL insider trade case

Mumbai, Jan. 3: The Securities and Exchange Board of India (Sebi) said today it had rejected applications made by Reliance Industries and its associates seeking to settle through a consent order mechanism a welter of insider trading charges arising from the merger of Reliance Petroleum Ltd (RPL) with the behemoth.

In an announcement today, the market regulator said it had rejected 149 applications made by RIL and associate companies as they were not in consonance with a circular that it issued last May.

Last year, Sebi had introduced rules that excluded offences such as insider trading, front-running, serious frauds and unfair trade practices from the consent order mechanism.

Under the consent order process, an individual or a corporate entity agrees to pay a monetary penalty, called the consent fee, without admitting guilt or refuting the charges that have been levelled by the capital market regulator.

The regulator can also debar the person or the company from accessing the capital markets for a certain period.

Sebi's clarification means that it can now either issue its own order or lob the case to a high-powered advisory committee.

After Sebi changed the rules, RIL had approached the Bombay High Court seeking a directive that the insider trading charges should be settled under the earlier regulations.

The insider trading case with regard to RIL dates back to 2007 when a few entities allegedly sold a 4.1 per cent stake of Reliance Petroleum for over Rs 4,000 crore.

To prevent a major fall in the Reliance Petroleum stock, the shares were first sold in the futures market and then in cash segment which led to a profit of over Rs 500 crore.

Meanwhile, RIL has approached the Securities Appellate Tribunal against Sebi, which has issued show-cause notices to the corporate giant over the irregularities in its share dealings.

SAT was originally scheduled to hear the RIL appeal on Friday (tomorrow) but has now adjourned the hearing to January 11.

Details of RIL's appeal before the tribunal could not be immediately obtained.

Disclosure norms

Sebi has asked listed companies to necessarily disclose all price-sensitive information, including monthly sales figures, to bourses first.

"All the events or material information which will have a bearing on the performance/ operations of the company as well as price sensitive information shall be first disseminated to the bourse as required under Clause 36 of the listing agreement," Sebi said in a circular.

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