Mumbai (Maharashtra) [India], August 23 : The Securities and Exchange Board of India (SEBI) on Friday imposed a ban on businessman Anil Ambani, 3 key officials of his company and 23 companies associated with him, from trading in the stock market for a period of five years.
This final order of the market regulator comes after a thorough investigation of allegations, which includes significant irregularities related to loan approvals, fund diversion, and non-compliance with regulations among the entities involved.
SEBI's investigation revealed a pattern of financial misconduct orchestrated by Anil Ambani and his associates. The regulatory body found that funds were being diverted under the pretext of loans to entities linked to Anil Ambani, leading to severe breaches of financial regulations.
As part of the sanctions, SEBI has issued a comprehensive order stating, "Noticees are restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of 5 years, from the date of coming into force of this order."
SEBI also stated that the ban has been imposed to prevent further market manipulation and to uphold regulatory standards.
In addition to the trading ban, SEBI also levied a significant penalty of Rs 25 crore on Anil Ambani. SEBI's order elaborates on the nature of the fraudulent scheme, stating, "The findings made in this Order have established the existence of a fraudulent scheme, orchestrated by Noticee No. 2 (Anil Ambani) and administered by the KMPs of RHFL (Reliance Housing Finance Limited)."
The charges against Anil Ambani and the key officials of Reliance Housing Finance Limited (RHFL) include the diversion of funds from the company terming as loans to related entities that were never repaid.
Despite strong objections from RHFL's board of directors, the company's management, influenced by Anil Ambani and senior officials the management ignored these directives and proceeded with the fraudulent transactions.
SEBI investigation highlighted that Anil Ambani's role as the 'chairperson of the ADA group' was pivotal in facilitating the fraudulent activities. The misuse of his position allowed for the orchestration of this scheme, leading to significant financial repercussions.
The order by SEBI stated that many of the borrowers failed to repay their loans, which in turn caused RHFL to default on its debt obligations. Additionally, a significant number of these borrowers had close ties to the promoters of RHFL, exacerbating the financial mismanagement.
SEBI added that the impact of the conduct by Anil Ambani and entities has been severe, with over 9 lakh shareholders still invested in RHFL facing considerable losses.
In February 2022, SEBI issued an interim order restraining RHFL, Anil Ambani, and three other individualsAmit Bapna, Ravindra Sudhakar, and Pinkesh R Shah from participating in the securities market until further notice. This interim order was a precursor to the more stringent sanctions now imposed in the final order of the market regulator.
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