Channel Promoter Under Govt Probe

News Express, the Hindi news channel that carried out what it said was a sting operation on opinion pollsters, is promoted by a group with a chequered record. Floated by the Sai Prasad Group of Pune, the channel has been relaunched with a logo in red and blue and a dual tag line — We Report to You/Fikar Aapki.

Promoted by Balasaheb Bhapkar and son Shashank Bhapkar, the Sai Prasad Group is being investigated by almost half a dozen agencies including the ministry of corporate affairs (MCA), the Securities and Exchange Board of India (Sebi), the Reserve Bank of India (RBI) and the economic offences wing (EOW) of the Goa police for alleged financial irregularities, including illegal raising of funds.

The group, which has interests in real estate, infrastructure, energy, food and films, is said to have collected funds from small investors under several schemes such as monthly installment plans and one-time payment plans in violation of Sebi rules.

In July last year, market regulator Sebi banned Balasaheb K Bhapkar, Vandana B Bhapkar and Shashank B Bhapkar besides Sai Prasad Foods and Sai Prasad Properties from collecting money from the public, launching new schemes, disposing of property and diverting funds after finding them running a collective investment scheme by offering plans through joint ventures.

Sai Prasad Properties, in its submission to Sebi, revealed that there were a total 13.5 lakh customers, of which 2.34 lakh were on the onetime payment plan and 11.15 lakh on the installment plan.

Investigations into companies belonging to the group were started by the ministry of company affairs and RBI after complaints in 2011. In August 2012, the Registrar of Companies (RoC), Goa, informed the market regulator about violations of the Collective Investment Schemes Regulations under the Sebi Act.

Sai Prasad followed a hierarchy of agents involving 10 levels for the purpose of getting business, rising from field representatives to a chief controller.

The company also used to give commissions to those higher on the chain against business brought in by those lower down against the booking of plots.
Courtesy:
OUR BUREAU MUMBAI
http://economictimes.indiatimes.com/articleshow/31015247.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

BANKER’S TRUST REALTIME : Four lessons from Sebi-Sahara spat

What should Sebi do to get to the bottom of Sahara case?
India’s apex court has once again expressed its unhappiness with Subrata Roy’s Sahara India Pariwar, a Lucknow-based conglomerate that has at least 4,100 establishments in its fold and Rs.1.18 trillion in assets spread across real estate, infrastructure, media, hospitality, sports and finance. “You are manipulating courts,” a Supreme Court bench, consisting of judges K.S. Radhakrishnan and J.S. Khehar, said on Monday in reference to the group approaching different forums for relief in a legal battle with the stock market regulator. The bench wanted to know why Sahara was refunding money directly to investors and not routing it through the Securities and Exchange Board of India (Sebi), as has been directed by the court.

The group claims that Sahara India Real Estate Corp. Ltd (SIRECL) and Sahara Housing Investment Corp. Ltd (SHICL) have already paid back some Rs.19,000 crore to investors who purchased securities sold by the two firms. Instead of providing a list of people who have received their refunds, the group has been filing appeals in various courts. Sebi wants a few directors of these two companies, including Roy, detained for delaying the refunds.

In August 2012, Radhakrishnan and Khehar asked Sahara to pay back Rs.24,000 crore and directed a retired Supreme Court judge, B.N. Agarwal, to oversee the process. Since then, Sebi has been struggling to get the investors’ money back.

What should it do to get to the bottom of the case which, according to Sebi counsel Arvind Datar, keeps getting “curiouser and curiouser”?

First, it can ask Sahara to provide the list of the top 1% or 5% of investors in the bonds sold by SIRECL and SHICL. Typically, the top 1-5% “creamy layer” of investors account for 20-25% of the money invested. This will make life easier for Sebi and also Sahara as it won’t have to send truckloads of documents to the regulator.

Second, Sebi can also look at the concentration of the investor base. If it can locate five geographical pockets, it would become easier to get a fix on the investors as Nandan Nilekani’s Aadhaar unique identity number project can do the rest of the job.

Finally, Sebi could ask Roy from which banks he withdrew the money to pay investors. He may have been paying cash but certainly he cannot keep Rs.19,000 crore in gunny bags at home or in the Sahara offices. In other words, had he indeed paid Rs.19,000 crore to the bond investors, he would have withdrawn that money from the banking system.

Sebi has been following the directives of the Supreme Court diligently but it lacks the acumen to deal with Roy.

How could Roy find himself in such a situation? The Sahara chief refused to give information to Sebi and thought he could get away with it, but now the apex court is seeking the same details from him. Had he provided the information to Sebi, he would not have found himself in such a mess.

It may or may not be the end game for Roy but many lessons can be learnt from the Sebi-Sahara spat.

First, it’s a vindication of the independence of the judiciary. In this case, justice may have been delayed but definitely not denied. The Supreme Court has demonstrated that politicians cannot shield a businessman for ever.

Second, it’s a lesson for the Indian financial system on its loopholes and how any smart entrepreneur can use regulatory arbitraging to his advantage.

Third, if indeed the two Sahara group firms had 30 million investors in their bonds, the Indian financial system can learn lessons in financial inclusion from Roy. The total number of demat accounts in India is about 20 million.

Finally, if Sahara fails to furnish the correct list of investors, the money for which there are no takers will flow into the government’s consolidated fund for investor education. That will deal a blow to Roy’s business model.

Note: Sahara has filed a defamation case in a Patna court against Mint’s editor and some reporters over the newspaper’s coverage of the company’s disputes with Sebi. Mint is contesting the case.

Banker’s Trust Realtime is a frequent blog by Tamal Bandyopadhyay, who writes a popular weekly column Banker’s Trust.
Courtesy:
Tamal Bandyopadhyay
First Published: Tue, Apr 23 2013. 01 34 PM IST
Updated: Tue, Apr 23 2013. 11 04 PM IST
http://www.livemint.com/Opinion/XYjUISOXNEpopbydhzSOpN/BANKERS-TRUST-REALTIME--Four-lessons-from-SebiSahara-spat.html

Sebi slaps over 30- crore penalty on 118 entities in BoR case

Market regulator the Securities and Exchange Board of India (Sebi) today imposed a total penalty of ? 30.75 crore on 118 entities, including the promoters of erstwhile Bank of Rajasthan ( BoR), for manipulative practices in the stock market during 2007- 2009.

Sebi has slapped a fine of 5 crore each on BoRs then promoter Pravin Kumar Tayal, his brothers — Sanjay Tayal and Navin Tayal — and his son, Saurabh Tayal — for violations of various norms. Besides, Sebi has imposed apenalty of ? 18 lakh each on 10 promoter group companies of the bank.

Another promoter entity — Ginger Clothing — has been slapped with a ? 15 lakh fine. Further, Sebi has imposed a fine of ? 10 lakh each on 10 entities for alleged failure to make an open offer regarding shares of BoR.

Sebi has alleged incorrect disclosures were made by all the promoters of BoR and their PACs ( Persons Acting in Concert) for the period June 2007 to December 2009. These entities have been referred by regulator as the promoter group companies and its directors, the Tayal group companies and directors, the Silvassa Group entities and the Yadav Group entities.

"Investigation alleged that the promoter group of BoR alongwith some companies which were belonging to the Tayal Group transferred shares in the off- market to entities, who were identified by investigation as Yadav Group and Silvassa Group.

"Further, fund movements were observed between the entities. Certain entities belonging to the Tayal, Silvassa and Yadav Groups were also seen to have purchased shares of BoR on market. These entities had received funds from Promoter/ Tayal Group companies," the order said.

Further, third party payments were also made to brokers on behalf of noticees belonging to the Tayal, Silvassa and Yadav Groups purchasing shares of BoR on market, it added. BoRs then promoters, led by Pravin Kumar Tayal, along with some companies that were connected to him and his relatives, by way of their continuous disclosure publicly announced their stake had come down from 44.18 per cent at the end of three months period ended June 2007 to 28.6 per cent as on quarter ending December 2009.

However, in reality, the holding of the promoters increased with the active collusion of front entities. Shareholding of promoters of BoR with PACs had increased from 46.8 per cent in June 2007 to 63.15 per cent in December 2009.

Sebi has imposed a penalty of ? 18 lakh each on 10 promoter group companies of Bank of Rajasthan
COURTESY:
PRESS TRUST OF INDIA
Mumbai, 14 February
http://epaper.business-standard.com/bsepaper/svww_zoomart.php?Artname=20130215a_012101002&ileft=8&itop=55&zoomRatio=130&AN=20130215a_012101002

SEBI names RIL in insider trading

Regulator rejects firm’s request for financial settlement in a 2007 case, RIL challenges order
MUMBAI: Market regulator Securities and Exchange Board of India (SEBI) has rejected Reliance Industries Ltd’s consent plea in the alleged insider trading case. A consent order refers to an order settling administrative or civil proceedings between the regulator and the firm alleged to have violated a law.


The consent plea was regarding the allegations of insider trading in the erstwhile Reliance Petroleum Ltd. SEBI has said that the entities allegedly violated certain norms on prohibition of fraudulent and unfair trade practices. SEBI rejected RIL’s consent pleas on two occasions earlier too.

RIL has approached the Securities Appellate Tribunal (SAT) against SEBI and its application was earlier scheduled to be heard on Friday. However, SAT has deferred the matter to January 11 for hearing.

SEBI has named 149 other entities along with RIL, whose consent applications were rejected. SEBI said that the consent applications of 12 more entities were rejected in the same insider trading case. RIL refused to comment.

Reliance had requested to settle a long-pending dispute over its 2007 sale of stock futures in a unit citing rule changes in late May that took a tougher stance on alleged violations. The dispute with Reliance stems from SEBI’s investigation into suspected insider trading when the energy conglomerate sold stock futures of Reliance Petroleum before folding the unit into its operations in 2007. RIL has denied engaging in any insider trading in that transaction. SEBI amended its procedures for so-called consent applications or requests for out-of-court settlements in May 2012 effectively banning use of monetary payments to resolve suspected cases of market violations including insider trading.

Consent applications of GMR Holdings Pvt Ltd, Edserve Softsystems Ltd, PMJ Properties, Garuda Plant Products Ltd and EPC Industries Ltd were also rejected by the market regulator. SEBI said these rejected applications are related to alleged violations of ‘Prohibition of Insider Trading Regulations’, ‘Substantial Acquisition of Shares and Takeovers’ and ‘Stockbrokers and Sub-brokers’ norms.

Besides, there are three applications related to alleged violation of ‘Prohibition of Insider Trading Regulations’ in the matter of another erstwhile RIL group company - Indian Petrochemicals Corporation Ltd (IPCL) - which used to be a government-owned company and was later acquired by Mukesh Ambani-led group as part of a disinvestment by the government. Both firms, Reliance Petroleum and IPCL, used to be separately listed entities, but were later acquired by RIL and got delisted from the stock exchanges.
Courtesy:
HT Correspondent letters@hindustantimes.com
(with inputs from agencies)
 5 Jan 2013
Hindustan Times (Mumbai)
http://paper.hindustantimes.com/epaper/viewer.aspx