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SEBI Handcuffs Sahara

In a detailed 99 page order, KM Abraham of SEBI makes the case for Sahara’s fund raising in 2008 and 2009 to be completely invalid because they sidestepped all necessary rules, and quite maliciously. (HT Ajay Shah)

They have ordered Sahara to repay all such money with 15% interest per annum, with refund notices in newspapers, and only then will Sahara entities be allowed to access the market.

Business Standard thinks the amount is above 4,800 cr. (which is just what was collected as of Jun 2009)

In the biggest refund order in its two-decade history, the Securities and Exchange Board of India (Sebi) today directed two Sahara group companies to return at least Rs 4,843 crore collected under their debenture schemes to investors. The two companies are Sahara Commodity Services Corporation and Sahara Housing Investment Corporation.

The case is in the Supreme Court. SEBI had ordered Sahara to stay put until the investigation was complete, Sahara went to court, the SC told SEBI to get that order done fast.The order won’t be active until the Supreme Court approves it.

I don’t know if Sahara can return the money but it will be tough, especially in the face of "no-further-fund-raising". That is one shady group, though, so anything is possible, but I’ll shed no tears if they’re gone.

K M Abraham retires next month from SEBI and in what seems to be a vindictive act against the Bhave team, the government won’t give them an extension. It will need this government to quit before solid action against the corrupt or criminal will be continued.

  • Saurabh says:

    Dear sir,
    U have hit the nail on head in ur last para.
    Cheers and waiting for more to come

  • Ajey says:

    Well said Saurabh… Kudos to Deepak.

  • Nerus says:

    Nice work reporting.

  • jitendra says:

    source : Times of India
    A Sahara India statement also said that Sebi has been vindictive and malicious towards the Sahara Group and this has been apparent from the chain of events, over the last one and a half years. “Over the last many years we have been facing a lot of oppressive, restrictive, unfair and unreasonable actions from various government authorities,” it said. It is definitely the prime duty of the government to go deep into the matter and do justice to us, said the statement.
    It said investors are being ensured that there interest is protected. It also emphasized that the matter is still subjudice and there is no direction/ order of the Hon’ble courts against Sahara. The Sahara release claimed that in last 32 years of its operation, the Group has never acted against the law or the sprit of the law or earned even a rupee illegally. The release also went to add that “unjustified acts of various regulators, departments are now forcing us (Sahara) to come out with every detail…all names…at an appropriate time.”

    • This is very defensive. Why don’t they address the argument, that they needed to have taken SEBI or RBI approval before issuing OFCDs? Optionally fully convertible debentures are quasi-equity, and require RBI and/or SEBI approval depending on their nature.
      The Sahara order is brilliant because they go into everything:
      – What kind of securities were issued
      – Why do they come under the purview of SEBI (i.e. SEBI does have the right to regulate such security issuances)
      – How and what rules were broken
      – What are the penalties (no fine remember, just returning money) and for how long they will last.
      This is a solid order, and in their defense, Sahara says “they are being oppressive”? Come on, we deserve more than that.

  • munnu says:

    what are the implications of this order on the functioning of other companies in sahara group. I have invested in a sahara flat and i am deeply concerned as to its future

  • Tariq says:

    When will the sebi’s order be reviewed in court? when is the next hearing supposed to happen.

  • munnu says:

    A vacation bench headed by Justice P Sathasivam directed the matter to be listed for hearing on July 4, the first day after the vacation.

  • Bhupesh says:

    Sahara name always reminds to this one news
    A…., T…. to attend Sahara wedding-II
    http://www.rediff.com/news/2004/feb/14sahara.htm