A penalty of ₹30 lakh imposed on Reliance Industries (RIL) and its two compliance officers by SEBI for improper disclosure of Facebook’s $5.7-billion investment into the company has been stayed by the Securities Appellate Tribunal (SAT).
SEBI had held RIL and its compliance officers, Savithri Parekh and K. Sethuraman, responsible for improper disclosure of the stake sale in its subsidiary company, Jio Platforms to Facebook, Silver Lake and Vista Equity Partners in 2020.
“We stay the effect and operation of SEBI’s 20 June order and list it for final disposal on 12th December,” said a SAT bench led by Justice Tarun Agarwala.
The Financial Times, London, reported about it on March 24, 2020, wherein it detailed the investment proposal. SEBI had said that it was “incumbent” on RIL to provide “due clarification on its own” through the stock exchanges — or other means — when it learned that the information was about to be published.
“One of the issues is that information that the company wanted to keep enveloped in secrecy until made public, clearly failed in that objective,” SEBI order said.
‘Abdicated responsibility’
“Further, when the bits of UPSI (unpublished price-sensitive information) that then became selectively available the company abdicated its responsibility to verify and come clean on the unverified information that was floating around.”
RIL did not comment to The Financial Times and other media publications at the time. SEBI held that Parekh and Sethuraman should have clarified to the exchanges on the news item. It was observed that RIL, Parekh and Sethuraman did not comply with the provision of principles of fair disclosure of UPSI, which states that there should be prompt dissemination of UPSI that gets disclosed selectively, inadvertently or otherwise, to make such information generally available. They were also alleged to have not issued any clarification, as required under LODR regulations.
No clarification sought: RIL
RIL maintained that as stock exchanges did not request clarification, it was not obligated to provide one. However, SEBI said it is not persuaded that the business may abdicate its responsibility to confirm a news story that has appeared in the newspaper.
In June 2022, SEBI in its order imposed the penalty jointly on RIL and its two compliance officers, K. Sethuraman and Savithri Parekh, for alleged violation of Prohibition of Insider Trading (PIT) regulations.