The Securities and Exchange Board of India (Sebi) on Friday imposed penalties on Mukesh D Ambani, Reliance Industries Ltd and two other entities for alleged manipulative trading in the shares of erstwhile Reliance Petroleum Ltd (RPL) back in November 2007.

Fines of Rs 25 crore and Rs 15 crore have been imposed on Reliance Industries Ltd (RIL) and its chairman and managing director Mukesh Ambani, respectively. Apart from them, Navi Mumbai SEZ Pvt Ltd has been asked to pay a penalty of Rs 20 crore and Mumbai SEZ Ltd pay Rs 10 crore.

The case pertains to sale and purchase of RPL shares in the cash and the futures segments in November 2007. It came after RIL’s decision in March 2007 to sell a 4.1 per cent stake in RPL, a listed subsidiary that was subsequently merged with RIL in 2009. The charges are that the equity was apparently sold first in the futures market and later in the spot market.

In a 95-page order, Sebi’s adjudicating officer B.J. Dilip said any manipulation in the volume or price of securities always erodes investor confidence in the market when investors find themselves at the receiving end of market manipulators.

“In the instant case, the general investors were not aware that the entity behind the above F&O segment transactions was RIL. The execution of the... fraudulent trades affected the price of the RPL securities in both cash and F&O segments and harmed the interests of other investors,” he said in the order.

While noting that execution of manipulative trades affects the price discovery system itself, the adjudicating officer said, “I am of the view that such acts of manipulation have to be dealt sternly so as to dissuade manipulative activities in the capital markets”.