Sale of shares by L and T Finance, Edelweiss: Reliance cries foul

In a statement, Reliance Capital said: “A few NBFCs, substantially L&T Finance and certain entities of Edelweiss Group, have invoked pledge of listed shares of Reliance Group and made open market sales of the value of approximately Rs 400 cr from Feb 2 to Feb 7, 2019.”

“The purported exercise of rights to enforce the security is illegal and excessive, and against the process and requirements of the respective borrowings’ documentation,” Reliance Group said.

“The illegal, motivated and wholly unjustified action by the above two groups has precipitated a fall of Rs 13,000 crore, an unprecedented nearly 55 per cent, in market capitalisation of Reliance Group over just these four short days, causing substantial losses to 72 lakh institutional and retail shareholders, and harming the interests of all stakeholders,” the statement claimed.

According to Reliance Group, the manner of conduct of the above open market sales, without any orderly market disposal through a bid or structured process for shares comprising the holding of the promoter group, is also illegal on several counts like price manipulation, insider trading, front running and market abuse.

The Reliance Group claimed the sale by L&T Finance and others is in violation of various regulatory provisions, including the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, which are applicable to all persons (including NBFCs) dealing in listed securities, whether on invocation of pledge or otherwise. It said group company Reliance Communications (RCOM) has announced plans for debt resolution through the National Company Law Tribunal and there was no adverse impact of this unrelated RCOM proposal on Reliance Capital, Reliance Infra and Reliance Power. All these firms are performing satisfactorily on all operating parameters, and there is no change whatsoever on any aspect as compared to the position prevailing prior to these sales, the statement noted.