SEBI has recently barred industrialist Anil Ambani for five years, along with 24 others from the securities market, including major former officers of RHFL. This action is due to their influence on the large financial embezzlement that the company was experiencing. Besides the ban, SEBI has levied a fine of ₹25 crore on Anil Ambani and restricted him from being a director or Key Managerial Personnel (KMP) in any other listed company and also any SEBI registered intermediary for the same period.
SEBI probe `unearthed that, with malicious intentions, Ambani and other KMPs of RHFL conspired to drain the company’s funds by camouflaging them as loans to his linked firms. Sustained and clear instructions from the RHFL Board of Directors contingent on the cessation of these kinds of lending and constant reviewing of the corporate loans, the management utterly disregarded these directives, implying a blatant absence of governance subsumed by Ambani.
Among the actions, RHFL itself has been restricted from the securities market for six months, and ₹6 lakh has been imposed on the company. The revelations contained in SEBI’s 222-page final order reveal a scheme where the monies were siphoned to ineligible borrowers linked to Ambani. These loans, which were to go to entities with no or little creditworthiness, were designed to favour individuals associated with Ambani and thereby contribute to the financial ruin of the company and its inability to meet its obligations.
The following misconduct has proven to have adverse consequences on RHFL’s shareholders. For example, there was a significant decline in the share price of the company from ₹59.60 in March 2018 to just ₹0.75 by March 2020 as the amount of fraud involved was realized. At the present time, more than ninety thousand shareholders are still holding their stakes in RHFL and are at a deep loss.
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