British financial market regulator FSA has imposed a fine of $9.6 million (about Rs50 crore) on a Dubai-based Indian investor for manipulating UK-listed securities of Mukesh Ambani-led Reliance Industries Ltd (RIL).
This is one of the biggest penalties imposed abroad for manipulation of foreign-listed securities of an Indian company. Besides, it is also the biggest ever fine imposed by the FSA on an individual for market abuse.
The wrongdoing was found to be committed by the investor alone and the company, India's most valued firm, whose securities were manipulated, itself has not been implicated in the case.
The British market watchdog Financial Services Authority (FSA) said in its order that it has fined Rameshkumar Goenka, an Indian businessman living in Dubai for past 12 years, $9,621,240 (about six million British pounds).
Goenka was found to be manipulating the securities of RIL by inflating the closing price of the company's GDRs (Global Depository Receipts), listed on the London Stock Exchange, on October 18, 2010.
The shares of RIL, the flagship company of the Indian business conglomerate led by India's richest person Mukesh Ambani, are primarily listed in India, but their GDRs are traded on the LSE also.
GDRs are like certificates of shares of a foreign company that can be issued and traded on international exchanges outside the company's home country.
Announcing the penalty order, FSA said that "in publishing its findings against Goenka, the FSA is not in any way criticising Reliance."
