Sahara Get Justice, SEBI Found Guilty

MUMBAI: Market regulator Sebi has been dragged to court by an investor body, Indian Council of Investors (ICA), for alleged in-action against state-run firms which together raised over Rs 11,000 crore through the 'private placement' route.

Mumbai (I-Newswire) March 20, 2013 - Interestingly, the development comes at a time when the market regulator has taken a harsh stand against Sahara India by attaching its properties to recover Rs 24,000 crore, the money that it raised through bonds, flouting the same norms on public issues.

Sample this: IIFCL raised Rs 10,000 crore in 2009 via private placement of tax-free bonds. IFCI raised Rs 350 crore via private placement of tax savings bonds during 2010-11. REC & PTC also raised funds from the public by issuing such bonds in the name of private placement.

"The modus operandi of most of these private placements of bonds was similar to how money is raised through public issues and without seeking Sebi's approval for such issuances," Priyadarshan Patankar, director, ICA, told TOI, adding that ICA lodged a complaint with Sebi last year against such issues but received no response, leading to the writ petition.

A mail sent to Sebi remained unanswered.

"The issue that Sebi needs to consider is that if such issuances comply with section 67 (3) of the act to make it a private placement, as the 50-person restrictions do not apply to public financial institutions," Ashwin Mathew, consultant with Khaitan & Co, told TOI.

Prior to this, Chairman of Sahara have asked SEBI for open debate. He said “I hereby challenge and invite the Chairman or/and Members or/and Executive Directors of Sebi for a live debate with me on a TV channel and let people know their wrong intent and deed, as a corporate regulator and clearly understand what extreme degree of injustice is being done by them to malign the image of Sahara India Pariwar,” said the advertisement entitled ‘Enough is Enough.’

It futher asks for a ten day notice to organise the appropriate channel and 60 minutes of air-time to facilitate the debate.