An individual has settled with Sebi a case pertaining to alleged failure to carry out adequate "due diligence" with respect to grant of loans by Religare Finvest, a subsidiary of Religare Enterprises, after paying Rs 44.2 lakh towards settlement amount.
The order came after the individual, Pankaj Sharma, filed an application with Sebi proposing to settle the regulatory violations "without admitting or denying the findings" through a settlement order.
"The instant adjudication proceeding initiated against Pankaj Sharma in the matter of Religare Enterprises Ltd vide SCN ...dated February 15, 2021 is disposed in terms ...of the Settlement Regulations," Sebi said in a settlement order passed on Tuesday.
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Pursuant to receipt of the complaints, Sebi initiated an investigation in the matter of Religare Enterprises Ltd (REL) to examine the allegations of financial mismanagement and diversion of funds of REL through its subsidiaries for the benefit of REL’s promoters or promoter connected entities.
The investigation also ascertained whether there was any violation of the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) during the period between April 2011 to March 2018.
Based on the findings of the investigation, it was prima facie observed that funds to the tune of Rs 2,473.66 crore were alleged to have been diverted from REL through Religare Finvest Ltd (RFL) to promoters/promoter group entities of REL.
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It was also observed that the individuals approving the relevant loans of RFL as well as directors of RFL, including Sharma, had failed to carry out adequate due diligence and exercise independent judgment with respect to the grant of loans/investments by RFL during the period of investigation. Therefore, it was alleged that the applicant had violated the provisions of PFUTP rules.
Following this, a show cause notice (SCN) was issued to the applicant in February 2021.
Pending adjudication proceedings, the applicant proposed to settle the instant proceedings initiated against him. After this, Sebi's committee recommended the case for settlement on payment of Rs 44.2 lakh. Consequently, he remitted the amount and settled the case with Sebi.
Earlier, REL and RFL had settled with Sebi a case pertaining to alleged financial mismanagement and diversion of funds after collectively paying Rs 10.5 crore towards settlement fees.
Individually, REL and RFL paid Rs 5.42 crore and Rs 5.08 crore towards settlement amount, respectively.
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