Religare Enterprises and Religare Finvest on Tuesday settled a case with market regulator Sebi regarding alleged financial mismanagement and diversion of funds after they collectively paid Rs 10.5 crore for settlement costs.
Individually, Religare Enterprises Ltd (REL) and Religare Finvest Ltd (RFL) paid Rs 5.42 crore and Rs 5.08 crore respectively for settlement amount, said the Securities and Exchange Board of India (Sebi) in a settlement order.
The order came after the two companies filed an application with Sebi proposing to settle regulatory violations “without admitting or denying the findings” through a settlement order.
“The enforcing enforcement procedures for the alleged standard …
Sebi had received complaints about financial mismanagement and diversion of funds especially in RFL, a subsidiary of REL which is a listed company, for the benefit of the promoters / promoter group companies.
Subsequently, the supervisor conducted an investigation which found that RFL was part of a fraudulent and misleading scheme and acted in a fraudulent manner which led to diversion of funds for the tune of Rs 2,473.66 crore through a tangible subsidiary of REL for the ultimate benefit of promoters, note the order.
Furthermore, it was found that REL’s consolidated financial statements were not true and fair and misleading to the shareholders of the listed company. It was also noted that despite repeated adverse observations by the Reserve Bank of India (RBI) regarding RFL’s corporate loan book, REL did not disclose the same to the stock exchange until 2017, it added.
As a result, the regulator initiated proceedings against the entities and issued a notice in November 2020 for violating PFUTP (Prohibition of Fraudulent and Unfair Commercial Practices) and LODR (Requirements for Obligations and Disclosure of Licenses).
Pending enforcement proceedings, the two companies proposed to settle the matter upon payment of settlement amounts.
Subsequently, the Sebi Commission recommended the case for settlement on payment of compensation.
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