Religare Finvest fund diversion case: Sebi imposes Rs 60 cr fine on Singh brothers, 8 others

Capital markets regulator Sebi on Thursday imposed a penalty totalling Rs 60 crore on 10 entities, including Malvinder Mohan Singh and Shivinder Mohan Singh, in a case involving the diversion of funds of Finvest. In addition, the Singh brothers have been barred from the securities market for three years, or till the recovery of the diverted money along with interest, while other entities have been prohibited for two years.

They have been directed to pay the penalty within 45 days, according to an order passed by the Securities and Exchange Board of India (Sebi).

The case relates to the diversion of funds to the tune of Rs 2,473.66 crore of Religare Finvest Ltd (RFL), a subsidiary of

(REL), during FY 2014-15 till FY 2017-18, in the garb of loans through layers of entities for the ultimate benefits of entities controlled by the erstwhile promoters — Singh brothers.

Sebi noted that these diverted funds never came back to RFL.

The diversion of funds was never disclosed to the shareholders of REL, which misled them to remain invested in the shares of REL or deal in the securities of REL. Thus, the apparent diversion of funds led to indirect manipulation of the price of shares of REL, Sebi said in its 127-page order.

By indulging in such acts, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.

Accordingly, the regulator has levied a fine of Rs 10 crore each on the Singh brothers, Rs 5 crore each on RHC Holding, A-1 Book Company, Religare Corporate Services (now Finserve Shared Services), Malav Holdings, Shivi Holdings, ANR Securities, Sunil Godhwan and Anil Saxena.

Further, the Singh brothers have been restrained from accessing the securities market or “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”.

It, further, said that brothers will continue to remain prohibited for a period of three years or till recovery of the money whichever is later. In addition, eight other entities have been prohibited from the securities markets for two years.

The regulator has directed REL and RFL to continue to pursue the measures, which have already been put into motion, to recover the amount due along with the interest.

Sebi, through its interim and confirmatory orders, has already directed REL and RFL to take all necessary steps to recover the amount along with due interest from the Singh brothers and others.

Singh brothers resigned from the board of directors of REL in February 2018. Also, they were de-classified as ‘promoters’ of REL.

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