Securities and Exchange Board of India has let off Reliance Industries Ltd and its chairman and managing director Mukesh Ambani and his brother Anil, who is vice-chairman and MD, from charges of insider trading in Larsen and Toubro scrip prior to selling their holding to Grasim Industries Ltd.

"It is proved that unpublished price sensitive information was not received by RIL or the Ambanis as insiders of L&T and as such they cannot be held liable for violation of regulation 3 of Sebi's insider trading norms," Sebi chairman G N Bajpai, who headed a three-member committee, said in his January 21 order.

The committee, which comprised Reserve Bank of India deputy governor K J Udeshi and Sebi whole-time board member A K Batra, held that RIL and the Ambani brothers had not violated the provisions of Sebi (Prohibition of Insider Trading) Regulations, 1992 as alleged in the show cause notice dated February 18, 2003.

Sebi received a complaint on January 7, 2002 regarding the sale of 10.05 per cent L&T shares by RIL to Grasim India Ltd wherein it was alleged that the Reliance group had increased their holding in L&T from 6.62 per cent in March 2001 to 10.05 per cent in November 2001 prior to the deal with Grasim.

RIL sold its stake to Grasim at a rate of Rs 306.6 per share thereby making huge profit since they had purchased additional equity shares at an average price of Rs 150 per share from the market.

Following this Sebi initiated investigations into the allegations of insider trading.

In its defence, RIL said it had no personal motive for negotiating and concluding the transaction, which was a deal based purely on commercial considerations.

RIL said the purchase price paid by Grasim was directly related to Birla Group's own commercial reasons for entering into and concluding the transactions.

It said that there is no material in the show cause notice, which established that the alleged price sensitive information was available with the Ambanis or RIL at the time of share purchase.

RIL further submitted that the basis of the inferences or conclusions arrived at in Sebi's investigation report that both RIL and Grasim were having specific knowledge of a probable deal at a price substantially higher than the market price before November 16, 2001 were unfounded and not borne out by the facts.

Sebi said the takeover regulations provide for transparency and dissemination of information to the investors and also to the management of the target company.