| Sebi faces heat to name entities in Reliance insider trading case |
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New Delhi, 8 November The Right to Information (RTI) movement, which has shaken up the government, has begun to knock on the doors of corporate India. In a significant move, the Central Information Commission (CIC), the apex body under the RTI Act, 2005, has directed the Securities and Exchange Board of India (Sebi) to share the details of several entities that were involved in the Reliance Petroleum (RPL) insider trading case in 2007. It also told the regulator to share details of the investigation reports and proceedings on the consent application filed by Reliance Industries (RIL) in this case. The directions came on an appeal by Arun Kumar Agarwal, a Bangalore-based lawyer. Earlier, the Sebi's Chief Public Information Officer (CPIO) had refused to share these details with Agarwal under RTI on the grounds that investigations and quasijudicial proceedings were pending. But the commission said, "After carefully considering the facts of the case and the submissions made before us, we are inclined to agree to the demand of the appellant that the disclosure of this information would serve a larger public interest," in an order dated November 6. It added, "We direct the CPIO to provide the first two items of information to the appellant within 10 working days of receiving this order." The commission also directed the market regulator to give details of the file notings and other proceedings that led to the notification of the consent order mechanism in 2007. Agarwal has also filed a public interest litigation in the Supreme Court challenging the appointment of Sebi Chairman U K Sinha. The regulator has the option to move an appeal in the high court against the CIC order. It is not clear if it plans to do so and on what grounds, as the CIC has said it is in public interest to reveal these details. An email questionnaire sent to a Sebi spokesperson did not elicit any response. Several entities have been identified by the Sebi who were involved in insider trading/short sale of shares of Reliance Petroleum in 2007. The details of these entities are still not in public domain. INSIDE STORY |RIL had sold 4.1% equity in RPL in the open market in Nov 2007 |To reduce price impact, RIL first short sold RPL in the F&O segment and then the spot market while covering the shorts |RIL generated revenues (sale consideration) of ~4,023 crore and an estimated profit of ~500 crore from the F&O short sale |Sebi probed trading pattern in RPL stock between Nov 1 and 29, 2007 |Sebi said since the company was aware of the sale of equity and sold futures prior to that, it amounted to insider trading |The company has maintained all rules and regulations were complied with |RIL had also said its action was driven by "protection" of market sentiment and the gain was recorded in the company's balance sheet |RPL was merged with parent RIL in 2009 and delisted |Sebi first issued a showcause notice to RIL in May 2009 Sebi has also been asked to give details of the file notings that led to the notification of the consent ordermechanism |
| Retail FDI game may not be over |
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New Delhi, 8 November A spanner may have been thrown in the government works on foreign direct investment (FDI) in multibrand retail. The issue came up in a public interest suit that alleged the government had allowed 51 per cent FDI into the multi-brand retail sector without framing rules and regulations and without the assent of both houses of Parliament. The petition, moved by Supreme Court lawyer Manohar Lal Sharma, was taken up on October 1. While replying to the Supreme Court, Attorney General G Vahanvati had said three amendments had been notified on October 30, enabling the government to allow FDI into the multi-brand retail sector. The changes were made to the Foreign Exchange Management Act (Transfer of Security by a Person Resident Outside India) Regulations, 2012. The Supreme Court adjourned the hearing of the PIL till January 22 next year. While doing so, Justice Lodha said to Sharma, "Why do you presume that the government will not place the amendments before Parliament? If the provisions require them to do so, they will have to do it. Your apprehensions are premature and unfounded. If Parliament does not approve the amendments, it will be at their [the Centre's] own risk and peril." The bench said the matter was being adjourned to the new year in the expectation the changes in the Fema (Foreign Exchange Management Act) would be brought in the winter session of Parliament. If Fema is not amended, FDI in retail cannot be operational. "The rules framed under Fema will have to be brought before both the Houses of Parliament. If no objections are raised by Parliament then it is deemed to be approved but if there are objections then there is a possibility of voting, too," said Piyush Goyal, MP and BJP treasurer. Section 48 of Fema reads: "Every rule and regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session for atotal period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation, or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation". A minister says the government is not liable to bring changes in Fema to Parliament. A senior Congress leader explained amendments, if any, needed to be examined closely. If the amendments are generic or particular, the commerce and law ministries will advise and Parliamentary strategy will depend on that. Minister of State for Information and Broadcasting Manish Tewari said, "FDI in retail is apolitical call, which has been taken by the UPA in the interests of farmers and consumers. So whatever is essential to implement that would be done." |
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Company Secretary, Chennai
email csarengarajan@gmail.com
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