The Supreme Court on Tuesday refused to interfere with a Securities Appellate Tribunal (SAT) ruling that upheld a ₹30-lakh penalty on two Reliance Industries Ltd (RIL) compliance officers for failing to promptly disclose price-sensitive information relating to Facebook’s $5.7-billion investment in Jio Platforms in 2020.
A bench led by Chief Justice of India Surya Kant, sitting with Justice Joymalya Bagchi, said the order was grounded in factual findings and raised no substantial question of law.
On 20 June 2022, the Securities and Exchange Board of India penalised compliance officers Savithri Parekh and K. Sethuraman for allegedly breaching the SEBI (Prohibition of Insider Trading) Regulations, 2015. The regulator found that RIL had failed to disclose unpublished price-sensitive information (UPSI) relating to Facebook’s investment negotiations, especially after international media reports in March 2020 highlighted the impending deal.
Senior counsel Ritin Rai, appearing for RIL, argued that the case involved no allegation of insider trading or unfair gain and that the counterparty was bound by strict confidentiality obligations. He submitted that RIL could not confirm or deny speculative media reports without breaching those terms.
The bench, however, observed that once details of a major investment entered the public domain, the company had a duty to clarify their accuracy. The Chief Justice noted that RIL was “best placed” to state whether the reports were correct, particularly given the likely impact on market speculation.
SEBI found that RIL’s share price rose sharply after Reuters, the Financial Times and other global outlets reported on 24 March that Facebook was close to acquiring a 10 percent stake. The regulator held that once such price-sensitive details surfaced during the UPSI period, RIL was obliged to issue a clarificatory disclosure.
SAT dismissed RIL’s appeal on 2 May 2025, finding that the deal had reached a concrete and credible stage by February 2020 and that the ensuing share price movements confirmed the information’s price sensitivity. It held that media leaks did not make UPSI “generally available” unless validated by the company, and that RIL was required to clarify the reports once they appeared. The tribunal therefore upheld Sebi’s penalty—a decision now affirmed by the Supreme Court.
(By arrangement with livemint.com)
