OFCD issuance: 2 Sahara group cos, Roy, 3 others fined Rs 12 crore

The Securities and Exchange Board of India (SEBI) on Monday imposed penalties totalling Rs 12 crore on two Sahara Group companies — Sahara Commodity Services Corporation Ltd and Sahara Housing Investment Corporation Ltd — in addition to Subrata Roy Sahara and three others for violating regulatory norms within the issuance of optionally absolutely convertible debentures (OFCDs) in 2008 and 2009.

The fines have to be paid collectively and severally inside 45 days, Sebi’s Adjudicating Officer Suresh B Menon mentioned within the order. The people penalised by Sebi are Ashok Roy Choudhary, Ravi Shanker Dubey and Vandana Bharrgava.

The case pertains to the issuance of OFCDs by Sahara India Real Estate Corporation Limited (SIRECL), now often known as Sahara Commodity Services Corporation Limited, and Sahara Housing Investment Corporation Limited (SHICL). The two corporations had issued the OFCDs through the 2008 and 2009 interval and had been allegedly achieved in contravention of the provisions of the Sebi’s ICDR (Issue of Capital and Disclosure Requirements) Regulations and PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) guidelines.

It discovered that SIRECL and SHICL raised cash via the general public difficulty of securities by issuing the OFCDs with out following the varied procedures meant to guard the curiosity of the buyers, in respect of public points, prescribed below the norms.

Sebi mentioned the subscription in direction of the OFCDs was solicited by the 2 entities — SIRECL and SHICL — from most people all through the nation, with out adequately informing them concerning the dangers concerned within the devices (OFCDs) or the dangers hooked up to the issuing corporations or dangers hooked up to the venture for which the capital was being raised.

“Therefore, I conclude that the two companies — SIRECL and SHICL — and their promoter/directors have 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,” the order mentioned.