Religare Enterprises and Religare Finvest on Tuesday settled with market regulator Sebi a case over alleged financial mismanagement and embezzlement after collectively paying Rs 10.5 crore in settlement fees.
Individually, Religare Enterprises Ltd (REL) and Religare Finvest Ltd (RFL) paid Rs 5.42 crore and Rs 5.08 crore respectively for the settlement amount, the Securities and Exchange Board of India (Sebi) said in an order of settlement.
The order came after the two companies filed a claim with Sebi offering to settle the regulatory violations “without admitting or denying the findings” through a settlement order.
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“The ongoing enforcement proceedings for the alleged defect … are resolved by the petitioners,” Sebi said in his order, adding that he will not be suing them for the defect.
Sebi had received complaints alleging financial mismanagement and embezzlement mainly in RFL, a subsidiary of REL which is a listed company, for the benefit of promoters/promoter group companies.
Subsequently, the regulator conducted an investigation in which it was observed that RFL was part of a fraudulent and deceptive scheme and acted fraudulently, which led to misappropriation of funds amounting to Rs 2,473, 66 crore through a material subsidiary of REL for the ultimate profit. of promoters, notes the order.
Furthermore, it was observed that the consolidated financial statements of REL were not truthful and fair and misled the shareholders of the listed company. It has also been observed that despite repeated negative comments from the Reserve Bank of India (RBI) regarding RFL’s corporate loan portfolio, REL did not disclose the same to the stock exchange until 2017, it said. -he adds.
As a result, the regulator initiated proceedings against the entities and issued them a show cause notice in November 2020 for violation of the PFUTP (Prohibition of fraudulent and unfair commercial practices) and LODR (Registration obligation and disclosure requirements) rules.
Pending enforcement proceedings, the two companies have offered to settle the matter upon payment of the settlement amounts.
Following this, the Sebi committee recommended the case for a settlement upon payment of costs.