In a significant crackdown on financial misconduct, the Securities and Exchange Board of India (SEBI) has imposed a five-year trading ban on industrialist Anil Ambani, along with 24 other entities, for their involvement in the diversion of funds from Reliance Home Finance Limited (RHFL). The markets regulator has also slapped a hefty Rs 25 crore fine on Ambani, effectively barring him from any association with the securities market during this period. The order extends to prevent Ambani from holding any position as a director or Key Managerial Personnel (KMP) in any listed company or intermediary registered with SEBI.
Fraudulent Scheme Uncovered
SEBI's 222-page final order meticulously outlines the fraudulent activities orchestrated by Ambani and the top executives of RHFL. According to the report, funds were diverted under the guise of loans to entities closely connected to Ambani. Despite repeated directives from RHFL’s Board of Directors to halt such questionable lending practices, the management, led by Ambani, disregarded these instructions and continued to funnel money to companies with little to no assets, cash flow, or revenue.
The investigation revealed that these loans, which amounted to hundreds of crores, were approved for financially unsound companies, indicating a deliberate attempt to misuse RHFL’s resources. Most of these companies defaulted on their loans, leading to RHFL’s financial collapse and eventual resolution under the RBI Framework. This catastrophic failure severely impacted public shareholders, with over nine lakh investors suffering significant losses as RHFL’s share price plummeted from Rs 59.60 in March 2018 to a mere Rs 0.75 by March 2020.
Widespread Penalties Imposed
In addition to the ban on Ambani, SEBI has taken action against several other individuals and entities involved in the scheme. Former RHFL officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, who played crucial roles in the fraudulent activities, have been fined Rs 27 crore, Rs 26 crore, and Rs 21 crore, respectively. Furthermore, SEBI has imposed Rs 25 crore fines on several related entities, including Reliance Unicorn Enterprises, Reliance Exchange Next Ltd, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd, and Reliance Big Entertainment Pvt Ltd. These entities were either recipients of the siphoned funds or served as intermediaries in the fraudulent scheme.
A Landmark Ruling
This ruling comes after SEBI’s interim order from February 2022, which had already barred RHFL, Anil Ambani, and three others from the securities market for allegedly siphoning off funds. The final order not only reinforces the interim actions but also sends a clear message about the consequences of financial malfeasance in India's corporate landscape. By holding prominent figures like Ambani accountable, SEBI aims to protect the integrity of the securities market and safeguard the interests of millions of investors.
Inputs by Agencies
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