In a fund diversion case involving Religare Finvest, SEBI asked seven entities, including Malvinder and Shivinder Mohan Singh, to pay Rs 48.15 crore within 15 days. In addition, SEBI warned that assets and bank accounts could be taken away if the payment was not made.
The entities failed to pay the Securities and Exchange Board of India (SEBI) fine, which led to the notice.
Malvinder and Shivinder Mohan Singh, RHC Holding, A-1 Book Company, Religare Corporate Services (now Finserve Shared Services), Malav Holdings, Shivi Holdings, ANR Securities, Sunil Godhwan, and Anil Saxena were among the ten individuals for whom the regulator imposed a fine of Rs 60 crore in its July 2017 order.
The Singh brothers each received Rs 10 crore in fines, while RHC Holding, A-1 Book Company, Religare Corporate Services (now Finserve Shared Services), Malav Holdings, Shivi Holdings, ANR Securities, Sunil Godhwan, and Anil Saxena each received Rs 5 crore in fines. The case involves the misappropriation of funds totaling Rs 2,473.66 crore by Religare Finvest Ltd (RFL), a subsidiary of Religare Enterprises Ltd (REL), in the form of loans through layers of entities for the ultimate benefit of entities controlled by the former promoters, the Singh brothers, from FY 2014-15 to FY 2017-18.
SEBI noted that RFL never received these diverted funds.
REL shareholders were misled into investing in REL securities or remaining invested in REL shares because the diversion of funds was not made public. According to SEBI’s order, the apparent rerouting of funds caused an indirect price manipulation of REL shares. They broke the rules of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) by engaging in such conduct.
“Being associated with the securities market including as a director or key managerial personnel in a listed company or an intermediary registered with SEBI of any market infrastructure institution, for a period of three years,” the Singh brothers have also been prohibited from entering the securities market. In addition, it stated that the brothers would remain prohibited for a period of three years or until the money is recovered, whichever comes first. Eight additional businesses have also been barred from the securities markets for the past two years.
REL and RFL have been given instructions by the regulator to continue taking the steps that have already been taken to recover the due amount and interest. In its interim and confirmatory orders, SEBI has already instructed REL and RFL to take all necessary measures to recover the money from the Singh brothers and others, including paying the appropriate interest.
In February 2018, the Singh brothers resigned from REL’s board of directors. Additionally, they were removed from the REL promotion category.
In a new notice, Sebi ordered the seven companies to pay Rs 48.15 crore within 15 days, which includes interest and costs associated with recovery. The market watchdog will attach and sell the entities’ moveable and immovable property in order to recover the amount if dues are not paid. In addition, they risk having their bank accounts taken away.