SEBI imposes 5-year trading ban on Anil Ambani, fined Rs 25 crore

Digital Desk: In a significant regulatory action, the Securities and Exchange Board of India (Sebi) has barred industrialist Anil Ambani and 24 other entities, including former top officials of Reliance Home Finance Limited (RHFL), from participating in the securities market for five years. This decision follows the results of fraudulent fund diversion from RHFL, which has led to substantial penalties and market restrictions.

Sebi has imposed a hefty fine of Rs 25 crore on Anil Ambani and prohibited him from any involvement with the securities market, including serving as a director or Key Managerial Personnel (KMP) in any listed company or registered intermediary, for the next five years. The regulator's final order, spanning 222 pages, reveals that Ambani, alongside RHFL's senior executives, orchestrated a scheme to divert funds under the pretense of loans to entities linked to him.

Despite directives from RHFL's Board of Directors to cease these dubious lending practices, the management continued to disregard these instructions, engaging in fraudulent activities. Sebi's investigation found that funds were funneled through credit-unworthy borrowers, all connected to Ambani, resulting in significant financial malfeasance. Loans were approved to entities with minimal assets or revenue, leading to defaults and RHFL's subsequent debt crisis.

RHFL's financial troubles culminated in its resolution under the RBI Framework, causing massive losses for public shareholders, including over 900,000 investors. The company's share price plummeted from Rs 59.60 in March 2018 to a mere Rs 0.75 by March 2020 as the scale of the fraud became apparent.

In addition to barring Ambani, Sebi has imposed penalties on 24 entities and individuals involved in the scandal. Former RHFL officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah have been fined Rs 27 crore, Rs 26 crore, and Rs 21 crore respectively. Other entities, including Reliance Unicorn Enterprises, Reliance Exchange Next Ltd, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd, and Reliance Big Entertainment Pvt Ltd, have each been fined Rs 25 crore. These entities received diverted funds or acted as intermediaries in the fraudulent scheme.

This ruling follows an interim order from February 2022, which had already barred RHFL, Ambani, and three others from the securities market over allegations of fund siphoning. Sebi's decisive action underscores its commitment to maintaining market integrity and holding accountable those involved in financial misconduct.