SEBI, the market regulator based in Mumbai, has banned well-known industrialist Anil Ambani, the brother of Mukesh Ambani, along with 24 other entities, including former key officials of Reliance Home Finance, from the securities market for five years due to the diversion of company funds.
SEBI has also fined Ambani Rs 25 crore and restrained him from being associated with the securities market, including as a director or Key Managerial Personnel (KMP) in any listed company or intermediary registered with the market regulator, for a period of 5 years.
The market regulator barred Reliance Home Finance from the securities market for six months and fined it Rs 6 lakh. Its 222-page order against the industrialist revealed that Anil Ambani had launched a fraud scheme to siphon off funds from RHFL by disguising them as loans to entities linked to him with the help of the company's key managerial personnel.
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While, the RHFL Board Directors, had issued strong directives to stop such lending practices and reviewed corporate loans regularly, the management ignored these orders, reported Economic Times. This highlights failure of government, driven by certain key managerial personnel under the influence of Anil Ambani.
List of People Ban by SEBI
SEBI, in its investigation of the case, has revealed the "existence of a fraudulent scheme, orchestrated by Noticee No. 2 (Anil Ambani) and administered by the KMPs of RHFL, to siphon off funds from the public listed company (RHFL) by structuring them as 'loans' to credit unworthy conduit borrowers, and in turn, to onward borrowers, all of whom have been found to be 'promoter linked entities' i.e. entities associated/ linked with Noticee 2 (Anil Ambani)".
The industrialist orchestrated the fraud using his position as 'chairperson of the ADA group' and his significant indirect shareholding in the holding company of RHFL. Sebi, in its order on Thursday, noted the cavalier approach of the company's management and promoter in approving loans worth hundreds of crores to companies with little to no assets, cash flow, net worth, or revenue.