Facebook-Jio Deal: Tribunal Stays Non-Disclosure Penalty On RIL

In a relief for Reliance Industries Ltd (RIL), the Securities Appellate Tribunal (SAT) has reportedly stayed the INR 30 Lakh penalty imposed by the Securities and Exchange Board of India (SEBI) on the conglomerate over social media giant Facebook’s investment in Jio Platforms in 2020.

“We stay the effect and operation of SEBI’s 20 June order and list it for final disposal on 12th December,” a Justice Tarun Agarwala-led SAT bench was quoted as saying.

It also directed SEBI to file a reply in the matter. 

“How feasible is it for any listed company to reply to every sort of information that is disseminated from across the globe?” Justice Agarwala reportedly asked the SEBI counsel.

In its plea, RIL had sought relief in the form of stay on the penalty order issued by SEBI.

In June, the markets regulator imposed a fine of INR 30 Lakh on RIL and two of its compliance officers, K. Sethuraman and Savithri Parekh, for non-disclosure of the much-touted $5.7 Bn deal. The company was ordered to pay the fine within 45 days.

In its order, SEBI raised concerns over RIL not disclosing the deal even after newspaper reports published details about the investment in March 2020 that sent its share prices soaring.

SEBI said it was ‘incumbent’ on the conglomerate to provide ‘due clarification on its own’ when it learnt that the sensitive information was about to be published. The market watchdog also noted that the company abdicated its responsibility to verify and come clean on the unverified information when the price-sensitive information became public.

Arguing before SEBI, RIL had stated it was not obligated to provide an explanation as stock exchanges had not sought any clarification.

At the heart of the controversy appears to be an article published in the London-based Financial Times on March 24, 2020. SEBI, in its order, said that price-sensitive details of the deal were published in the report, and added that RIL shares rose almost 15% on a day-to-day basis on the very next day.

The SEBI order also noted that RIL shares moved barely 10% post the official corporate announcement on April 22, 2020.

Besides Facebook, global investments and tech giants including Google, General Atlantic Singapore and Silver Lake have also invested in Jio. In turn, Reliance has also shored up its investments in a clutch of startups across the globe to bolster its tech capabilities and leverage them to power its digital evolution.

In January this year, the conglomerate acquired a 54% stake in deeptech startup Addverb Technologies for $132 Mn and later picked up a 25% stake in deeptech platform Two Platforms for $15 Mn in February. 

Earlier this year, it also invested $200 Mn in InMobi-backed lock screen content startup Glance and also acquired a 25.8% stake in quick commerce startup Dunzo for $200 Mn in January this year.

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