Sebi slaps Rs12 cr penalties on 2 Sahara Group firms, Subrata Roy and 3 others in OFCD case

Market regulator Securities and Exchange Board of India (Sebi) has imposed penalties totalling Rs12 crore on two Sahara Group firms - Sahara Commodity Services Corporation Ltd and Sahara Housing Investment Corporation Ltd - as well as Subrata Roy Sahara and three other directors of the companies for violating regulatory norms in the issuance of optionally fully convertible debentures in 2008 and 2009.

The company directors penalised by Sebi include Ashok Roy Choudhary, Ravi Shanker Dubey and Vandana Bhargava. The fines have to be paid jointly and severally within 45 days, according to the Sebi order.
The OFCDs were issued by Sahara India Real Estate Corporation Limited (SIRECL), now known as Sahara Commodity Services Corporation Limited, and Sahara Housing Investment Corporation Limited (SHICL).
The two companies had issued the OFCDs, allegedly 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) rules.
According to Sebi, SIRECL and SHICL raised money through public issue of OFCDs without following the procedures intended to protect the interest of the investors.
Also, Sebi said, SIRECL and SHICL solicited the subscription towards the OFCDs from the general public without adequately informing them about the risks involved in the instruments (OFCDs), or the risks attached to the issuing companies or risks attached to the project for which the capital was being raised.
''Therefore, I conclude that the two companies, ie, 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,'' Sebi's Adjudicating Officer Suresh B Menon said in the order.
Also, the entities did not comply with the orders and summons issued by the regulator.