India's market regulator accused Reliance Industries on Friday of having committed a "fraud" in taking a short trading position at the time of selling a stake in a subsidiary in 2007, ordering it to surrender 4.5 billion rupees ($69 million) plus interest in "unlawful gains".
Reliance, the $64 billion conglomerate controlled by India's richest man, Mukesh Ambani, rejected the ruling by the Securities and Exchange Board of India and said it would appeal to the Securities Appellate Tribunal.
In its ruling SEBI alleged that before Reliance Industries sold a 5 percent stake in Reliance Petroleum in November 2007, when it was a separately listed company, it took derivative short positions through third parties in Reliance Petroleum shares, to profit from an ensuing fall in the price following the sale.
SEBI, in a 54-page ruling, said Reliance had as a result made a profit of 5.1 billion rupees and ordered it to forfeit 4.5 billion rupees plus interest within 45 days.
Besides imposing the fine, SEBI said it would bar Reliance and the third parties involved from trading in derivatives for one year.
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