SAT quashes Sebi's Rs 7 lakh fine against RIL's Jio Financial Services

The Securities Appellate Tribunal (SAT) on Wednesday quashed a Sebi order imposing a penalty of Rs 7 lakh on Jio Financial Services Ltd in case of alleged manipulation in certain trades in long-dated Nifty options in 2017.

Earlier this year, Reliance Industries Ltd (RIL) demerged its financial services undertaking into Reliance Strategic Investments Ltd (RSIL) and renamed it as Jio Financial Services Ltd (JFSL) -- formerly known as Reliance Strategic Investments Ltd.

The case pertains to certain trades in long-dated Nifty options between Reliance Strategic Investments and Morgan Stanley France SA done back in 2017.

The order came after the Reliance group company approached the appellate tribunal against an order passed by Securities and Exchange Board of India (Sebi) in June 2017. In the order, the regulator levied a fine of Rs 7 lakh on the company.

Setting aside the Sebi's order, a bench consisting of Justice Tarun Agarwala and Presiding Officer Meera Swarup, said the regulator has not considered the evidence properly.

"To hold a simple one-way trade as manipulative when it is not a circular or reversal trade and in the absence of any shred of evidence of mutual arrangement with a motive to manipulate the market, the impugned order cannot be sustained and is quashed," the tribunal said in its 33-page order on Wednesday.

Sebi, in its order issued in June 2017, alleged violations of certain PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations by the company.

"The observations relating to the conduct of noticee and other attending facts and circumstances of the case... when applied to the test of preponderance of probability, lead me to the undeniable conclusion that noticee had engaged in manipulation of the price/premium of 11400 PE at least on two trading days i.e. August 8, 2017 and August 10, 2017," Sebi stated in its order.

Earlier this month, SAT set aside the penalty imposed by Sebi on Reliance Industries' Chairman Mukesh Ambani and two other entities in a case related to alleged manipulative trading in the shares of erstwhile Reliance Petroleum Ltd (RPL) back in November 2007.