SEBI charges Criminal Case against Sahara Group

Capital Market Regulator – SEBI approached a local court, filing criminal charges against the Sahara Group which said that it was SEBI regulator who  refused to accept the documents of Sahara Group.

Capital Market Regulator – SEBI appealed for criminal proceedings against Sahara Group head Mr. Subrata Roy and other managing directors of the group. SEBI alleged that the group has violated some regulatory orders.

Earlier on August 31, Supreme Court had ordered India Real Estate Corporation and Sahara India Housing Corporation to refund Rs.17400-Crore.  The SC had been convinced that the prescribed amount was collected from about 3-Crore investors through Optionally Fully Convertible Debentures (OFCDs). These OFCDs offered 15% interest to the investors.

In an appeal to the Securities Appellate Tribunal, Sahara Group officials alleged that the regulator did not accept the submitted documents. The appeal was followed by the appellate authority’s order to the SEBI to respond quickly.

The regulator of SEBI replied immediately. By filing a petition before the Mumbai metropolitan magistrate asking him to file criminal charges against the Sahara Group and its head, the SEBI made another climax.

The petition filed by SEBI alleged the Sahara head Mr. Roy and other senior management members of both companies violating a series of orders.

Earlier the Supreme Court had empowered the SEBI to attach Sahara Group properties in case if the Group fails to move according to the SC order. The apex court also had empowered the regulatory authority to freeze the bank accounts of Sahara Group.

The SEBI records show that the group was late to submit the list which contains full details of all OFCD investors. On the other hand Sahara Group claimed timely – submission of the list.

Sahara Group officials stated that they were ‘on time’ to submit the required documents. The group said that the SEBI did not accept the documents but only the CD which contained the details of all OFCD investors.

Sahara Group had earlier approached the SC demanding more time for the submission of documents. Pointing to the difficulty in submitting 30-Crore documents, the group pleaded for more time.

The group expressed their hope that the regulator is authorized to fine the group for delayed –submission. Yet the regulator should not refuse to accept the delayed documents, the company officials added.

The SEBI refused to accept the documents as they were brought to the office very late after the office hours. The SEBI said that the group had asked for the time period till December.  However the SEBI turned down the appeal.

SEBI approached the court to move further against Sahara Group as the group has failed to deposit Rs.24000-Crore on time. SEBI pointed that the regulator has to refund the amount to the OFCD investors by the end of November.

In another petition to the Supreme Court, the SEBI had filed criminal charges against the group on the basis of non-compliance of SC Orders.

Though the regulator is empowered, by the SEBI Act, to file criminal complaint, the regulator has seldom used this provision. The regulator often resorted on or preferred financial penalties rather than imprisonment. The criminal proceedings last longer than monetary penalty.

The SC had empowered the regulatory body to attach properties of the group in case if it fails to meet the order timely.

The court, in its ruling, had said in case the group failed to meet this, its assets could be attached. Despite all these troubles, the group’s decision to approach the SAT pursuing more time to submit investor details caused many eyebrows raised.

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