Sebi imposes Rs 60-crore fine on Singh brothers, 8 others in Religare Finvest fund diversion case

The Singh brothers have been barred from the securities market for three years, or till the recovery of the diverted money along with interest.

In a 127- page order, Sebi said that the diverted funds never came back to RFL.

The Securities and Exchange Board of India (Sebi) on Thursday levied a penalty of Rs60 crore on 10 entities, including brothers Malvinder and Shivinder Singh, in a case involving the diversion of funds of Religare Finvest. The entities have been directed to pay the penalty within 45 days.

The Singh brothers have been barred from the securities market for three years, or till the recovery of the diverted money along with interest. The other entities have been prohibited for two years.

The brothers have also been barred from indirectly 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 three years.

The case relates to the diversion of funds amounting to Rs2,473 crore from Religare Finvest (RFL), a subsidiary of Religare Enterprises (REL), between FY15 and FY18, in the garb of loans through layers of entities for the ultimate benefits of entities controlled by the erstwhile promoters Singh brothers.

In a 127- page order, Sebi said that the 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.

In doing so, they had violated the provisions of Prohibition of Fraudulent and Unfair Trade Practices. Accordingly, the regulator has levied a fine of Rs10 crore each on the Singh brothers, and Rs5 crore each on RHC Holding, A-1 Book Company, Religare Corporate Services (now Finserve Shared Services), Malav Holdings, Shivi Holdings, ANR Securities, Sunil Godhwani and Anil Saxena.

The regulator has directed REL and RFL to continue to take steps to recover the amount due along with the interest.

Singh brothers resigned from the board of directors of REL in February 2018 and were de-classified as ‘promoters’ of REL.

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