India’s market regulator on Monday fined Reliance Industries and two of its compliance officers for violating fair disclosure norms during Facebook’s $5.7 billion investment in its digital unit in 2020.
In April 2020, Meta’s Facebook invested $5.7 billion in Reliance’s Jio Platforms, aiming to allow WhatsApp to offer payments services to millions of small businesses. The deal helped billionaire Mukesh Ambani’s Reliance slash its heavy debt load.
The Securities and Exchange Board of India (SEBI) said Reliance did not disclose the deal even after newspaper reports in March 2020 published price-sensitive details about the imminent investment that led to a spike in its shares.
Reliance did not immediately respond to requests for comment outside regular business hours.
When the bits of (unpublished price-sensitive information) that then became selectively available the company abdicated its responsibility to verify and come clean on the unverified information that was floating around,” SEBI said in its order late on Monday.
SEBI said it was “incumbent” on Reliance to provide “due clarification on its own” once it knew about the “selective availability” of the information.
The regulator imposed a penalty of 3 million Indian rupees ($38,522) on Reliance and the two compliance officers.
Reliance profit jump
Ambani launched Reliance Jio with much fanfare in September 2016 offering free services up to March 2017, sparking intense fare wars and creating consolidation in the Indian telecom sector. Experts say Reliance is preparing to compete with e-commerce platform Flipkart, backed by Walmart, and Amazon by announcing the launch of its retail business.
Reliance said in a statement that its gross refining margin, the profit earned from each barrel of crude, was down to $8.2 in the March quarter from $8.8 in the previous quarter. Refining margins are a key profitability gauge for Reliance, one of the world’s largest refiners.