Markets regulator Sebi has cleared Reliance Petroinvestments (RPIL), an RIL group company, of any wrongdoing in a nine-year-old case in which the company was alleged to have traded in the shares of erstwhile IPCL using insider information.

Sebi’s adjudicating officer cleared RPIL in the case due to lack of evidence to establish that the company had access to unpublished price-sensitive information.

This is a reversal of Sebi’s stance from its own order of May 2013 when the markets regulator had imposed a fine of Rs 11 crore on RPIL for insider trading in IPCL shares in 2007. Subsequent to that order, the RIL group company had moved the Securities Appellate Tribunal which, in December 2015, had asked Sebi to take a fresh look at the matter. The latest order is according to the SAT order.

Sebi’s adjudicating officer said that the entities – RPIL and RIL – were indeed related parties, but its investigations could not conclude that RPIL and RIL were insiders in the absence of any evidence by the investigating authority to establish they had access to unpublished price-sensitive information when they traded in IPCL shares.

Because of this, “it can be concluded that the noticee (RPIL) has not violated provisions of… Prevention of Insider Trading Regulations” and thus there was no fine.
According to the Sebi report, Mukesh Ambani was the chairman of IPCL as well as CMD of RIL during 2007, and RPIL was then holding more than one-third of total voting rights in IPCL. In turn, RPIL was a fully owned by RIL. Sebi’s investigation found that in 2007, RPIL had suddenly started buying IPCL shares just before the announcement of merger of IPCL with RIL. However, Sebi did not find any evidence that RPIL bought those IPCL shares with insider knowledge of the coming merger of IPCL with RIL, and hence absolve RPIL of insider trading charges.