Sebi banned Anil Ambani and 24 Others from Securities Market for 5 Years

Sebi has imposed a five-year ban on Anil Ambani and additional 24 entities, which include former officials of Reliance Home Finance, due to allegations of fund diversion. Ambani has been penalized with a Rs 25 crore fine and is barred from engaging in the securities market. Meanwhile, Reliance Home Finance has been fined Rs 6 lakh and is prohibited from market activities for six months.

P24 News Media

August 23, 2024

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Sebi bans Anil Ambani, 24 other entities from securities market for 5 years

Business

Following numerous complaints about fund mismanagement at Reliance Home Finance (RHFL) during the fiscal year 2018-19, Sebi conducted an investigation and concluded that Anil Ambani was primarily responsible for the fraudulent activities. According to Sebi, the case highlights a severe failure in governance at a major publicly traded company, allegedly orchestrated by the promoter with the support of the company’s key managerial personnel (KMPs). The regulator criticized the company’s management for blatantly ignoring board directives concerning general purpose working loans.

In its 222-page final order, Sebi not only imposed a five-year ban on Anil Ambani but also on 24 other entities, including former senior officials of RHFL, from participating in the securities market. Reliance Home Finance was also suspended from the market for six months and fined Rs 6 lakh. Among those banned are former key officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, who were each fined Rs 27 crore, Rs 26 crore, and Rs 21 crore respectively. Other entities, such as Reliance Unicorn Enterprises and Reliance Exchange, were fined Rs 25 crore each.

The investigation revealed that RHFL’s key managerial personnel, including Ambani, diverted funds from the company by disguising them as loans to entities linked to the promoters. This led to significant financial losses, as these borrowers failed to repay the loans, causing RHFL to default on its debts. As a result, the company underwent resolution under the RBI Framework, severely impacting public shareholders.

For instance, RHFL’s share price, which was Rs 59.60 in March 2018, had plummeted to Rs 0.75 by March 2020 as the scale of the fraud became apparent and the company's resources were depleted. Currently, over 900,000 shareholders continue to face substantial losses.