India’s market regulator fined Reliance and two of its officials on Monday for Facebook’s failure to properly disclose $5.7 billion investment in Jio Platforms in April 2020.
Securities and Exchange Commission of India speak media reported on the impending deal in March, which sent the group company’s shares up. (Some inside baseball: Financial Times news In March, Meta, then known as Facebook, was in advanced stages of negotiations to invest billions in Jio Platforms, the digital unit of Reliance Industries. The news was quickly amplified by some outlets.)
The market regulator is of the opinion that Reliance has a “responsibility” to provide “its own reasonable clarification” through stock exchanges – or other means – knowing that information is about to to be announced.
“One of the problems was that information, which the company wanted to keep secret until it was made public, clearly failed in that goal,” the market regulator said. “Furthermore, when the bits of UPSI (unpublished price-sensitive information) were then selectively available, the company abdicated its responsibility to verify and clean up the unverified information in question. floating.”
Reliance was not available for comment to the Financial Times and other firms at the time, although the FT stated its request for comment as “immediately“Showing that it might not bring Reliance enough time to evaluate how it will respond. (Baseball insider: It’s generally not clear how much time a company will need before it can comment. Usually, if it’s not a big announcement, a few hours is considered sufficient. a kind of news about the Jio-Facebook deal, I would say a day business is more than enough.)
But the market regulator is not buying that.
“The other difficulty that the announcements come with is that they are unable to clarify the rumours on their own as the deal has not been signed, has not been approved by the Company’s Board of Directors, and it is not final yet. However, here it is also hard to believe that the company will respond to the rumors only after completing the transactions,” it said.
“Based on the announcements of companies on the stock exchange alone, there are many announcements where only the MoU has been entered, or when the terms sheet has been signed, or another acquisition is being sought. .”
However, the fine against Reliance and its compliance officers is a small amount (about $38,500). The market regulator said on its announcement that Reliance and its employees denied the allegations.
However, this announcement gives us an overview of how the two companies invest together. Facebook and Reliance began “initial discussions to explore a potential transaction” on September 1, 2019. In late October, Facebook’s corporate development team visited Reliance’s offices. A month later, Reliance executives visited Facebook’s Menlo Park headquarters. Law firm Davis Polk was arrested on November 26, Morgan Stanley arrived at the scene in January. Negotiations on the terms of the deal began in February.
