The letter alleges Edelweiss “had pressed huge sale orders significantly below the prevailing market price, thus majorly contributing to downward movement in the last traded price”. Such selling was “enforced not only in the cash but also in the derivatives segment in a disorderly manner”. Leading to deliberate “hammering down of the price of Reliance Power shares”.
R-Power has 3.1 million shareholders and debt of over Rs 30,000 crore. The promoters had raised the loans by pledging their shareholding in the company, one of which was issued to the Edelweiss group.
The share sell-off was primarily by Edelweiss and L&T Finance of pledged shares. The two lenders have denied any wrongdoing and plan to approach Sebi to clarify their position.
In its letter, R-Power says there was no more than “margin shortfall and breach of some loan covenants”. However, the entities of Edelweiss “resorted to enforce the pledge on Reliance Power shares and dumped the same in the market”.
A Reliance group spokesperson, when asked about the letter, said: "As resolved by the boards of various group companies, we will take all legal steps necessary to protect and enhance the value of our stakeholders, including pursuing it with appropriate regulators".
Drawing comparisons with similar sales of pledged shares by lenders, the letter says “there has been similar disruption and irresponsible conduct in respect to other corporate houses, including the Essel group, Suzlon group, IRB Infrastructure, etc”.
The letter also gives some legal analysis to bolster its view. It contends that “unfair trade practices are not subject to a single definition; rather, it requires adjudication on a case by case basis”. Also, “broadly, trade practice is unfair if the conduct undermines ethical standards and good faith between parties engaged in business transactions”.