Logos of Jio and Facebook.
Credit: Reuters Photo,X/@facebook
New Delhi: The Supreme Court on Tuesday dismissed an appeal of Reliance Industries Limited and two of its officials against a Securities Appellate Tribunal's decision upholding a penalty imposed by markets regulator SEBI for not making prompt clarification to stock exchange about the Jio-Facebook deal.
"The bigger the company, the greater the responsibility. You must meticulously comply with the regulations," a bench comprising Chief Justice Surya Kant and Justice Joymalya Bagchi observed during the hearing.
The top court declined to interfere with the Securities Appellate Tribunal (SAT) ruling and effectively affirmed SEBI’s findings that Reliance Industries Limited (RIL) and its compliance officers failed to promptly disclose unpublished price-sensitive information (UPSI) concerning the high-profile stake sale.
In June 2022, the Securities and Exchange Board of India (SEBI) imposed a penalty totalling Rs 30 lakh on RIL and two individuals, Savithri Parekh and K Sethuraman, for not making prompt clarification to the stock exchange pertaining to the Jio-Facebook deal, which was disclosed through media reports.
The SEBI penalty was upheld by the SAT on May 2, 2025.
"In our considered view, the conclusion drawn by the SEBI with respect to the violation of the 2015 regulation, whereby there is a statutory embargo on insider trading, we are satisfied that there is no case made out for interference. That apart, the issues dealt with by the SEBI and the SAT are substantially issues of fact giving rise to no substantial question of law for consideration by this court," the bench said in the order.
The top court said the SAT findings did not merit interference and moreover, no question of law was there needing adjudication.
During the hearing, the counsel for RIL said that the firm had complied with the regulations and there was no insider training or unlawful gains.
The prior selective news leaks about the Facebook-Jio deal should not be a ground to impose liability on the company, he said.
He also said there was no obligation on any listed firm to “verify, confirm or deny such market rumours” under relevant regulations.
"The moment this news came that Facebook is making such a huge investment, if it was not correct, you should have immediately denied. If everybody knows that such a huge investment is coming, the market price will rise on speculation. You are the best person to say if it is correct or not," the CJI said during the hearing.
SEBI’s adjudicating officer had in June 2022 imposed the Rs 30 lakh combined penalty after concluding that RIL violated Principle 4 of Schedule A of the Prohibition of Insider Trading (PIT) Regulations.
As per Principle 4, listed companies have the obligation to make "prompt dissemination of unpublished price sensitive information that gets disclosed selectively, inadvertently or otherwise to make such information generally available”.
The capital markets regulator held that the company did not issue timely confirmations or denials in response to widespread media reports in March-April 2020 speculating on Facebook’s investment in Jio Platforms.
SAT upheld the SEBI’s order.
"I find that the news pertaining JIO-Facebook deal came out on March 24 and 25, 2020, and the information to the stock exchanges about the media release titled 'Facebook to invest Rs 43,574 crore in Jio Platforms for a 9.99 per cent stake' was made on April 22, 2020, i.e. after 28 days and this calls for an appropriate penalty," SEBI Adjudicating Officer Barnali Mukherjee had said in an order.
The regulator said Reliance Industries had the obligation to have enveloped the unpublished price-sensitive information. However, having come to know about the selective availability of the information it was incumbent upon the company to provide due clarification on its own.
Thus, Parekh and Sethurama should have clarified the exchanges on the news item, he had said.
It was observed that Reliance Industries, Parekh and Sethuraman did not comply with the provision of principles of fair disclosure of UPSI, which states there should be prompt dissemination of unpublished price sensitive information that gets disclosed selectively, inadvertently or otherwise to make such information generally available and did not issue any clarification on the same as required under LODR regulations.
Under the LODR (Listing Obligations and Disclosure Requirements) rules, the listed entity may on its own initiative also confirm or deny any reported event or information to stock exchanges.
Accordingly, SEBI held them liable for the violation of the provisions of principles of fair disclosure for purposes of the code of practices and procedures for Fair Disclosure of UPSI under LODR regulations.