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BW Businessworld

Sebi Cancels Sahara Asset Management's Licence

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The Securities and Exchange Board of India (Sebi ) has cancelled the portfolio management license of Sahara's asset management division, in yet another setback for a conglomerate that is trying to raise $1.6 billion to free its jailed boss.
 
Sahara Chairman Subrata Roy has been held in a New Delhi jail since last March after he failed to comply with a court order to repay investors in a bond programme that was ruled illegal.
 
SEBI said on Friday that Sahara Asset Management Company (Sahara AMC) Private Ltd did not meet its "fit and proper" norms, due to the legal proceedings against some Sahara firms and officials, including founder Roy.
 
Sebi member S. Raman wrote in his order cancelling the license that allowing Sahara to run its portfolio management business could "cause prejudice to the interests of investors and the safety and integrity of the securities market".
 
He said as a regulator of the securities market Sebi has to take into consideration important facts such as prosecution proceedings and detention order pending against the persons ultimately controlling or influencing Sahara AMC while considering its eligibility as a portfolio manager.
 
The portfolio management business had assets under management of just 7.7 million Indian rupees ($125,000) as of the end of last month, according to the Sebi order. The firm's mutual fund business, which runs under a separate Sebi license, managed 1.47 billion rupees as of the end of 2014, according to fund management industry body AMFI.
 
Sahara has been locked in a lengthy legal battle with Sebi over the bond programme and the regulator is seeking redress for millions of investors. Sahara says it has repaid most investors, a claim Sebi has disputed.
 
The high bail amount for Roy reflects the cost of the programme, estimated by regulators to be as much as $7 billion.
 
Sebi also said on Friday it had launched further proceedings against Roy, two of his companies and some of their executives over a failure to comply with an earlier order from the regulator over the illegal bonds.
 
Sebi official, who declined to be named due to the sensitivity of the matter, said the proceedings, which could lead to fines, were being launched because investors in the illegal bond programme had still not been refunded by Sahara.
 
Sebi said Sahara's asset management company has 30 days to transfer its portfolio management business to another company registered with the regulator, or must allow investors to redeem assets.
 
(Agencies)