SEBI slaps Rs.12 crores penalties on Sahara Group firms and individuals

SEBI slaps Rs.12 crores penalties on Sahara Group firms and individuals

The fines are to be paid jointly and severally within 45 days

The Securities and Exchange Board of India (SEBI) has imposed penalties of Rs.12 crores on the Sahara Group firms Sahara Commodity Services Corporation Ltd and Sahara Housing Investment Corporation Ltd.

Also, Subrata Roy Sahara and three others Ashok Roy Choudhary, Ravi Shanker Dubey, and Vandana Bharrgava have been held responsible for violating the regulatory norms in 2008 and 2009 in the issuance of the Optionally Fully Convertible Debentures (OFCD).

The case relates to the OFCDs by Sahara India Real Estate Corporation Limited (SIRECL), now known as Sahara Commodity Services Corporation Limited (SCSCL) and Sahara Housing Investment Corporation Limited (SHICL).

The companies issued the OFCDs allegedly in contravention of the provisions of SEBI's Issue of Capital and Disclosure Requirements (ICDR) Regulations and Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Rules.

SEBI had discovered that SIRECL and SHICL raised money through the public issues of securities by issuing the OFCDs without following the various procedures intended to protect the interest of the investors.

It said that the subscription towards the OFCDs was solicited by the two entities from the general public throughout the country, without adequately informing them about the risks involved or the risks attached to the issuing companies, or risks attached to the project for which the capital was being raised.

Thus, SEBI's Adjudicating Officer Suresh B Menon said in the order, "It is concluded that the two companies SIRECL and SHICL and their promoter/directors 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."

He added that the companies did not comply with the orders and summons issued by the regulator.