Reliance Industries' attempts to settle the Reliance Petroleum insider trading case through consent orders has once again been thwarted by market regulator Sebi, which has also issued a show-cause notice to RIL before giving its final order in the case.
The case deals with allegations against certain entities who short-sold shares of Reliance Power on behalf of RIL, ahead of its merger. Short selling is a process where an entity or trader sells shares in the market without owning them with expectations that prices will fall, to buy them at a later date and thereby earn a profit.
Sebi is probing the sale of Reliance Petroleum stock futures in the first week of November 2007. According to a report in the Economic Times, RIL made a profit of Rs 500 crore from the sale of Reliance Petroleum shares.
New York: Since the crackdown on insider trading began five years ago on Wall Street, there have been more than 70 arrests. Manhattan US Attorney Preet Bharara, who has won guilty convictions against high-profile Galleon Group billionaire Raj Rajaratnam and former Goldman Sachs director Rajat Gupta, is not resting on his laurels.
Bharara is now displaying fresh firepower by going after Steven Cohen, the billionaire art collector and founder of hedge fund giant SAC Capital. Bharara said Mathew Martoma, 38, a former portfolio manager for Cohen's SAC Capital Advisors, used an illegal tip on a clinical trial of an Alzheimer's drug to net $276 million for Cohen's fund.
Bharara said the profit of around a quarter of a billion dollars was the most any hedge fund ever netted from a single illegal tip.
Indian American Martoma, is the only one charged so far with helping SAC Capital make $276 million in illegal profits on shares of Elan Pharmaceuticals and Wyeth in July 2008, after getting inside tips related to clinical trial results of an Alzheimer's drug the two companies were developing. Martoma traded on the clinical trial data before it was made public which is illegal.
The insider trading case involving former Goldman Sachs director and Wall Street tycoon came to rest with Gupta getting convicted by the Manhattan US district federal judge Preet Bharara. While many believe that he has got away with a lenient sentence, others feel that in India even this would not have been possible.
Sanjaya Baru, Geo-Strategy Director of IISS, told CNN-IBN, Sebi had investigated and found 24 insider trading cases. That makes it 50 % of the total cases that they investigated into. Two arms of Reliance were fined 25 crore each. The Ranbaxy director was also found guilty of insider trading.
Friends of former McKinsey head Rajat Gupta, convicted on insider trading charges, are urging his acquaintances to submit letters of support to a US judge presiding over his case here to help secure a lenient sentence for the Indian-American.
Gupta, 63, was found guilty by a jury last month of passing confidential boardroom information about Goldman Sachs to hedge fund founder Raj Rajaratnam. He will be sentenced on October 18 by US Judge Jed Rakoff and faces a prison term of up to 25 years.
If convicted on charges of securities fraud and conspiracy, Gupta faces a possible maximum 25 years in prison. Reuters
