Bad news for Mukesh Ambani as SAT rejects Reliance plea against…., may have to face penalty of…

In a big worry for Mukesh Ambani, the Securities Appellate Tribunal (SAT) dismissed Reliance Industries’ appeal against a Securities and Exchange Board of India (SEBI) order imposing a Rs 30 lakh penalty for violating Prohibition of Insider Trading (PIT) Regulations.

In its June 2022 adjudicating order, SEBI found RIL in breach of PIT Regulations for failing to disclose details of a potential investment deal with Facebook in Jio Platforms promptly.

“We find the appellants in violation of Principle 4, Schedule A of the PIT Regulations and uphold the SEBI order,” said the SAT bench, presided over by Justice P S Dinesh Kumar.

What is the case?

The case relates to a confidentiality and non-disclosure agreement signed between RIL and Facebook in September 2019, followed by a non-binding term sheet on March 4, 2020, for Facebook’s investment in Jio Platforms.

Legal experts said that while the monetary penalty in this case was just Rs 30 lakh, the SAT judgement could set a precedent for companies on handling news leaks and disclosures.

On March 24, 2020, the Financial Times newspaper reported that Facebook was nearing a deal to acquire a 10 per cent stake in Jio.

Domestic media also followed up the news report, triggering a 15 per cent surge in RIL’s share price.

RIL formally disclosed the Jio-Facebook deal to stock exchanges only on April 22, 2020, after executing a definitive transaction document, prompting another 10 per cent jump in its stock price.

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