Securities Exchange Board of India: On 22-8-2024, the Securities and Exchange Board of India imposed a ban on Reliance Home Finance Limited and 23 other entities for 5 years. SEBI also imposed a fine of Rs. 25 crores on each entity for a fraudulent scheme, orchestrated by Anil Ambani and administrated by key managerial persons of Reliance Home Finance Limited (‘RHFL’), for siphoning of funds from the public listed company, RHFL and structure the loans to credit the unworthy conduit borrowers who are linked to Anil Ambani.
Facts:
The noticees were involved in perpetrating a fraudulent scheme by disbursing General Purpose Working Capital Loans (‘GPCL’) resulting in erosion of the RHFL’s finances due to such loans eventually being declared Non-Profit Assets.
There was violation of Securities and Exchange Board of India Act, 1992; Securities Contracts (Regulation) Act, 1956; Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015; Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.
Order
Ananth Narayan G, Whole Time Member, restrained RHFL from accessing the securities market and prohibited from buying/ selling/ dealing with securities market for a period of 6 months. Also, 23 other companies have been restrained from accessing the securities market and prohibited from buying/ selling/ dealing in securities for a period of 5 years. He also restrained Anil Ambani from being associated with the securities market. He also cannot be a director or Key Managerial Personnel in any listed company, holding/ associate company of any listed company for a period of 5 years. Further, the noticees have been directed to pay the penalty within 45 days from the date of receipt of this order.
Further, SEBI has to determine the quantum of illegal gains/ benefit made by way of the fraudulent scheme.
The recent decision by SEBI to impose a monetary penalty on Anil Ambani highlights the regulatory body’s commitment to enforcing strict compliance with securities laws. This action underscores SEBI’s vigilance in monitoring financial practices and holding individuals accountable for violations. For legal professionals and businesses, this serves as a crucial reminder of the importance of adhering to regulatory norms. It also signals a continued focus on transparency and accountability in India’s financial markets, reinforcing the need for diligent legal and financial practices.