SEBI has imposed a fine of ₹30 lakh on Reliance Industries (RIL) and its compliance officers, Savithri Parekh and K. Sethuraman, for failing to clarify on news or promptly disclose information with regard to stake purchases in the company’s subsidiary Jio Platforms by FaceBook, Silver Lake and Vista equity partners.
SEBI said the three noticees did not comply with the provision of principles of fair disclosure of UPSI (unpublished price sensitive information), which states that there should be prompt dissemination of unpublished price sensitive information that gets disclosed selectively, inadvertently or otherwise to make such information generally available. RIL and its compliance officers did not issue any clarification on the same, as required under Regulation 30(11) of SEBI (LODR) Regulations, 2015 which states that “The listed entity may on its own initiative also, confirm or deny any reported event or information to stock exchange(s),” SEBI said.
But SEBI also noted that no quantifiable figures are available to assess the disproportionate gain or unfair advantage made as a result of the defaults by the noticees.
“It is not possible from the material available on record to ascertain the disproportionate gain or unfair advantage made by the noticees, amount of loss caused to an investor or group of investors as a result of the default.”
News pertaining to the JIO Facebook deal came out on March 24 and 25, 2020 and thestock exchanges were informed about the same through the media release titled “Facebook to Invest ₹43,574 crore in Jio Platforms for a 9.99 per cent stake” on April 22, 2020, after 28 days, and this calls for an appropriate penalty, SEBI said.
SEBI conducted an investigation for suspected insider trading in RIL for a period between September 1, 2019 to May 7, 2020.
According to SEBI, RIL made an announcement stating that Facebook would invest ₹43,574 crores in JPL for a 9.99 per cent stake. On May 4, 2020 , the company announced that Silver Lake will invest ₹5,655.75 crores in JPL for a 1.15 per cent stake. On May 8, 2020, the company made an announcement stating that Vista equity partners was to invest ₹11, 367 crores in JPL for a 2.32 per cent. Hence, the UPSI period for announcement 1 was from Sept 1, 2019 to March 24, 2020 The UPSI period for Announcement 2 was from April 17, 2020 to May 3, 2020 and the UPSI period for announcement 3 was from April 25, 2020 to May 07,2020.
During the investigation, it was gathered that there was a lot of news flow around Facebook investing in Jio in March and April, 2020, prior to the corporate announcement made on April 22, 2020. It was observed that first news about the impending Jio-Facebook deal was published in the Financial Times (FT), London on March 24, 2020 post market hours and thereafter, the said news report was widely circulated in Indian media on the same day and the next day. The news articles, inter-alia, stated that (i) Facebook was seeking to buy a multibillion-dollar stake in Reliance Jio, (ii) Facebook was close to signing a preliminary deal for a 10 per cent share in Jio, (iii) a deal with Facebook was due to be announced in March-end, coinciding with the end of the Indian financial year. Post-publication of said news articles, RIL’s share price went up by almost 15 per cent on March 25, 2020. There were many other news articles/ items published/ appeared in the media relating to the Jio-Facebook deal prior to its corporate announcement by the company. But the actual announcements or the clarifications came late.