SEBI Issues Rs 48.15 Crore Demand Notice To Singh Brothers, 5 Others In Religare Finvest Fund Diversion Case

SEBI on Tuesday sent a notice to 7 entities, including Malvinder and Shivinder Mohan Singh, asking them to pay Rs 48.15 crore within 15 days in a fund diversion case of Religare Finvest.
    
SEBI also warned of attachment of assets and bank accounts, if they fail to make the payment.
    
The notice came after the entities failed to pay the fine imposed on them by the Securities and Exchange Board of India (SEBI).
    
Last year in July, the regulator in its order imposed a fine of Rs 60 crore on 10 entities—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.
     
The regulator had 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.
    
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 Religare Enterprises Ltd (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 order.
    
By indulging in such acts, they violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.
    
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 the 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.
    
In its fresh notice, Sebi directed the seven entities to pay Rs 48.15 crore, which includes interest and recovery costs, within 15 days.
    
In the event of non-payment of dues, the market watchdog will recover the amount by attaching and selling moveable and immovable property of the entities. Besides, they face attachment of their bank accounts.