The Securities and Exchange Board of India (SEBI) on Monday imposed total penalties of Rs 12 crore on two Sahara Group companies – Sahara Commodity Services Corporation Ltd and Sahara Housing Investment Corporation Ltd – as well as Subrata Roy Sahara and three others for violating regulations in issuing Optional fully convertible bonds (OFCDs) in 2008 and 2009.
The SEBI officer, Suresh B Menon in the order, said the fines must be paid jointly and singly within 45 days. The individuals who were sanctioned by Sippy are Ashok Roy Chowdhury, Ravi Shankar Dubey and Vandana Bhargava.
The case relates to the issuance of OFCDs by Sahara India Real Estate Corporation Limited (SIRECL), now Sahara Commodity Services Corporation Limited, and Sahara Housing Investment Corporation Limited (SHICL). Both companies had issued OFCDs during 2008 and 2009 and allegedly in contravention of the provisions of the ICDR (Issuance of Capital Requirements and Disclosure) and PFUTP (Prohibition of Fraudulent and Unfair Business Practices) regulations.
It found that SIRECL and SHICL raised funds through the public issue of securities through the issuance of OFCDs without following the various procedures intended to protect the interests of investors, in relation to public issues, as stipulated in the rules.
Sebi said the two entities — SIRECL and SHICL — had asked to subscribe to OFCDs from the general public across the country, without adequately informing them of the risks involved in the instruments (OFCDs), the risks associated with the issuers, or the risks attached to the venture for which the capital was raised.
“I therefore conclude that the two companies — SIRECL and SHICL — and their promoters/managers have fraudulently issued OFCDs in order to induce naive investors to subscribe to these OFCDs, thus violating the provisions of the … PFUTP Regulations,” the order said.