Sahara OFCD Issuance: SEBI Imposes Rs12 Crore Penalty on 2 Group Companies, Subrata Roy & 3 others
Moneylife Digital Team 28 June 2022
In an example of how the market regulator has multiple proceedings on the same issue, the Securities and Exchange Board of India (SEBI) has imposed penalties of Rs12 crore on two Sahara group firms for an issue going back to 2008-09. A whole decade after the pathbreaking supreme court (SC) order of August 2012 in the Sahara twin companies case,  SEBI has imposed penalties on Subrata Roy Sahara and three others—Ashok Roy Choudhary, Ravi Shanker Dubey and Vandana Bharrgava for violating regulatory norms in the issuance of optionally fully convertible debentures (OFCDs) in 2008 and 2009.
 
Meanwhile, SEBI has continued to take a rigid stance with regard to the over Rs15,000 crore invested in OFCDs deposited with the regulator under court orders (Read: https://www.moneylife.in/article/sahara-refunds-did-the-sc-want-sebi-to-sit-on-rs1544867-crore-for-a-decade/64306.html) while Sahara went ahead and collected over Rs1 lakh crore through four  cooperative societies operating across India and has left those investors in a lurch. 
 
Under SEBI’s latest order, Sahara Commodity Services Corporation Ltd and Sahara Housing Investment Corporation Ltd, the twin realty companies, need to pay the fines jointly and severally within 45 days. It is clear that Sahara is in no position to pay, but there is no further action against Subrata Roy or the company, despite cases and interventions filed in various courts including the SC. 
 
The case pertains to issuance of OFCDs) by Sahara India Real Estate Corporation Limited (SIRECL), now known as Sahara Commodity Services Corporation Limited, and Sahara Housing Investment Corporation Limited (SHICL) to raise a 'sizeable amount' from the public in contravention of the provisions of the SEBI Act between 2008 and 2009. The matter had come to light when group firm Sahara Prime City had filed its offer document with SEBI in 2010.
 
“Clearly, when the noticees falsely represented that the OFCD issue was a private placement of securities, they deprived the investors of the various measures of investor protection which were available to them under the delegated provisions of the Companies Act…and the ICDR Regulations,” the SEBI order said.
 
As on 31 March 2021, SEBI had recovered Rs15,473 crore out of Rs23,000 crore from SHICL and SIRECL, respectively, the order further stated.
 
The two companies had issued the OFCDs during 2008 and 2009 period, allegedly,  in contravention of the provisions of the SEBI's ICDR (Issue of Capital and Disclosure Requirements) Regulations and PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.
 
SEBI found that SIRECL and SHICL raised money through public issue of securities by issuing the OFCDs without following the various procedures intended to protect the interest of the investors, in respect of public issues, prescribed under the norms.
 
Further, SEBI said the subscription towards the OFCDs was solicited by the two entities—SIRECL and SHICL—from the general public throughout the country, without adequately informing them about the risks involved in the instruments (OFCDs), or the risks attached to the issuing companies or risks attached to the project for which the capital was being raised.
 
"Therefore, I conclude that the two companies i.e. SIRECL and SHICL and their promoter/directors have issued the OFCDs in a fraudulent manner in order to induce gullible investors to subscribe to such OFCDs, thereby violating the provisions of... the PFUTP Regulations," SEBI's adjudicating officer Suresh B Menon said in the order.
 
Also, the entities did not comply with the orders and summons issued by the regulator.  
 
Moneylife has  been covering all stories on Sahara. In case you missed them, you can read them here:  https://www.moneylife.in/tags/sahara.html
 
Comments
In High-decibel Battle with Yes Bank, Jawahar Goel Exits as Dish TV MD after Losing Vote at EGM
Moneylife Digital Team 27 June 2022
In a severe rebuke to Dish TV promoters, a majority of its shareholders has voted against the reappointment of managing director (MD) Jawahar Lal Goel and two other directors at its extraordinary general meeting (EGM). The...
Bombay HC Imposes Rs5 lakh Costs on Adani Ports, Dismisses Plea against Disqualification in JNPA Tender Process: Report
Moneylife Digital Team 27 June 2022
The Bombay High Court on Monday imposed costs of Rs5 lakh on Adani Ports and Special Economic Zone Ltd (Adani Ports) while dismissing its plea challenging the disqualification of its bid in connection with the tender issued by the...
SEBI Issues Warning to Aurobindo Pharma over Ongoing USFDA Audit
Moneylife Digital Team 27 June 2022
Aurobindo Pharma Ltd has revealed that it has received a warning letter from market regulator Securities and Exchange Board of India (SEBI) for non-disclosure of details related to an ongoing audit of one of its manufacturing units...
Did Zomato Buy Blinkit To Offset Its Losses from Online Food Delivery?
IANS 27 June 2022
Online food delivery platform Zomato, which saw its stock tumbling below its IPO (initial public offer) price, as India reopened and retail food industry came back on track, had acquired quick-commerce grocery delivery platform...
Free Helpline
Legal Credit
Feedback