Market regulator SEBI today dismissed allegations of insider trading by Manoj Modi, a close aide of RIL chief Mukesh Ambani, saying charges could not be established after its probe into the six-year-old matter about dealings in shares of erstwhile IPCL.
SEBI also dismissed insider trading charges against Modi’s wife Smita Modi.
“Considering the facts and circumstances of the case and available records, the alleged violation of... Prevention of Insider Trading Regulations... against Manoj Modi and Smita Modi do not stand established and the matter is, accordingly, disposed of,” SEBI said today.
The regulator said charges of Manoj Modi being an ’insider’ as per SEBI’s Prevention of Insider Trading regulations could not be established, and consequently, the allegation against Smita was also not established.
The order follows a SEBI investigation into trading of shares of Indian Petrochemicals Corporation Ltd, an erstwhile subsidiary of Reliance Industries Ltd (RIL) that was later merged with the parent company, during the period from February 22, 2007 to March 8, 2007.
SEBI had found that IPCL shares had witnessed an unusual plunge of over 8 per cent on March 5, 2007 despite the announcement of an interim dividend, but witnessed a major surge of over 14 per cent on March 8-9 that year subsequent to an announcement of amalgamation of IPCL with RIL.
Consequently, SEBI had ordered a probe into alleged violations of insider trading regulations by Manoj Modi and Smita Modi, by way of trading in the company’s shares on the basis of price-sensitive information relating to the dividend and amalgamation matters.
In its 18-page order, SEBI said today that Manoj Modi admitted to have served as consultant to Mukesh Ambani, then Chairman of IPCL, and as director of Reliance Petroleum during that period, as also having served on the board of another group company, Reliance Retail Ltd.
It was alleged that during the period from February 28, 2007 to March 2, 2007, Manoj and Smita Modi together bought one lakh shares of IPCL for Rs 257.82 lakh prior to announcement of declaration of interim dividend and amalgamation of IPCL with RIL.
It was further alleged that Manoj and Smita Modi did not sell any shares of RIL and received the dividend amounting to Rs 6 lakh, while pursuant to merger of IPCL with RIL in October 2007, the two received 20,000 shares of RIL as against 1,00,000 shares of IPCL acquired prior to the dissemination of the price sensitive information.
It was alleged that the two were in possession of unpublished price sensitive information while trading in 1,00,000 shares of IPCL, as Manoj Modi was a ‘connected person’ and therefore an ‘insider’ and Smita was also a connected person and an ‘insider’ being his wife.