Sebi imposes Rs 7 lakh penalty on Reliance Strategic Investments Ltd

Sebi on Friday sanctioned Reliance Strategic Investments Ltd for allegedly rigging some deals in Nifty long-dated options in 2017.

The case relates to certain deals in long-term Nifty options between Reliance Strategy Investments and Morgan Stanley France SA that took place in 2017.

The Securities and Exchange Board of India (Sebi) conducted an investigation into the trades that took place on July 31, August 8 and August 10, 2017. Based on the results of the investigation, the regulator alleged violations of certain PFUTP (Prohibition of Fraud and Unfair Trading Practices) regulations by both entities .

In an order issued on Friday, SEBI has imposed a fine of Rs 7 lakh on Reliance Strategic Investments Limited (notice).

“The notes regarding the conduct of the notice and other facts and circumstances of the case… PE at least on two trading days, i.e. 08 August 2017 and 10 August 2017,” Sibi Dismissal Officer Soma Majumder said in the writ.

SEBI indicated that there were no internal policies to substantiate the trading decisions of the Notice to execute trades relevant to such reduced rates and that there was no evidence to show that other quotes had already been obtained/considered by the Notice and that these were the best available rates.

Taking into account these factors, the regulator said, “It would not be wrong to conclude that the relevant deals by notice of a significant deduction from the fair value, by a mutual arrangement with the counterparty, at least in two days, without any proper justification, manipulative in nature “.

In this case, Sebi said, it is not possible to determine from the recorded material the amount of disproportionate gain or unfair advantage resulting from the default of notice or the losses incurred by the investors as a result of the default.

“Furthermore, the materials available in the record also do not show that default in notice is recurrent in nature. I note from the notice reply, i.e., the traded value involved in the relevant trades is also large, at around Rs 984 crore. Fraud is a serious offense,” he said. .

In March this year, Morgan Stanley France SA settled the matter by paying a settlement fee of Rs 2,535,000.

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