The market regulator, the Securities and Exchange Board of India (SEBI) on Friday, August 23, took stringent action against industrialist Anil Ambani and several other 24 entities, including former officials of Reliance Home Finance Ltd (RHFL). The recent order by the market watchdog bars Anil Ambani and 24 associated entities from participating in the securities market for 5 years and also imposed a hefty penalty for their subsequent rike in a major financial fraud.
Consequences: Penalties and Bans
Anil Ambani: In the latest move, SEBI imposed a penalty of Rs 25 crore on Anil Ambani and also barred him from participating in the securities market in any capacity for a period of 5 years. In simple terms, this means that Ambani cannot now serve as a director or Key Managerial Personnel (KMP) in any listed company or any intermediary registered with Sebi.
Sebi Bans Anil Ambani, 24 Other Entities From Securities Market For 5 Years |
Reliance Home Finance Ltd (RHFL): Moreover, the market regulator also barred RHFL from the securities market for 6 months and imposed a fine of Rs 6 lakh. According to Sebi's 222-page final order, Ambani and his associates are accused of diverting funds from RHFL by disguising them as loans to entities connected with Ambani himself.
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Reliance Home Finance Ltd |
Other Entities: The remaining 24 entities involved, including former key officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, have also been fined significantly. Bapna faces a penalty of Rs 27 crore, Sudhalkar Rs 26 crore, and Shah Rs 21 crore. Other entities linked to the fraud have been fined Rs 25 crore each.
The other entities on the list include Adhar Project Management and Consultancy Private Limited, Indian Agri Services Private Limited, Phi Management Solutions Private Limited, Arion Movie Productions Private Limited, Citi Securities and Financial Securities Private Limited, Deep Industrial Financial Limited, Azalia Distribution Private Limited, Vinayak Ventures Private Limited, Gamesa Investment Management Private Limited, Medybiz Private Limited, Hirma Power Limited.
About the allegations and why it matters
The market regulator investigation found a complex fraud orchestrated by Anil Ambani, in conjunction with key managerial personnel of RHFL including severe lapses in governance and financial management within RHFL.
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The misuse of loans and fraudulent financial practices led to severe repercussions, including a dramatic drop in RHFL’s share price from Rs 59.60 in March 2018 to just RS 0.75 by March 2020. The company’s financial instability affected over 9 lakh shareholders who are now facing significant losses.
RHFL shares
After the recent move, the shares of the company experienced a significant decline. At 12:54 pm IST, the shares of the company were trading at Rs 4.45, down by 5.12 per cent.
