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The Unresolved Battle of SEBI vs Sahara

CASELET, BANKING & FINANCIAL SERVICES
ET Cases, 5 Pages
AUTHOR(S) : Prof.(Dr.) Abhay Kumar, Assistant Professor, Mukesh Patel School of Technology Management & engineering, NMIMS University, Mumbai and Prof.(Dr.) Shilpa Rastogi, Director, Research Mentor, Nasik

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The Unresolved Battle of SEBI vs Sahara

The case devolves around various loopholes such as fraud, duping investors, corporate governance lapses oblivious to regulatory bodies, contempt of court, money laundering, benami transactions and non –compliance of provisions of the Companies Act. The Sahara case depicts the issues and challenges posed by leading corporates. Business ethics and transparency in corporate governance is essential for the growth, profitability and stability of any business which was severely lacking in
the Sahara case. The lawsuit concerns two unlisted Sahara group companies which started raising funds in 2008. The irregularities were noticed by two investors who filed complaint with SEBI on 25th December 2009 and 4th January 2010. SEBI found merit in the complaint and in November 2010, SEBI restricted the promoters and directors of Sahara group companies, Sahara India Real Estate Corporation and Sahara Housing Investment Corporation, from raising any capital through the issue of any form of securities and cautions the investors through its website........................

Teaching Note Preview

The Unresolved Battle of SEBI vs Sahara

Synopsis

Cases of corporate governance debacle are not new globally or in India. Sahara India Pariwar, as is popularly known through its two companies over a period of time swindled a huge INR 24000 crore from its investors through Optionally Fully Convertible Debentures (Hereafter, OFCDs). Two of its group companies Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) started collecting subscription through OFCD from 25th April 2008 to 13 April 2011. Surprisingly and interestingly, no investor on any occasion knocked the doors of the police or the court until October 2010, when two the investors filed application with Securities and Exchange Board of India (SEBI). SEBI and the Supreme Court’s jurisdiction w.r.t refunding crores of rupees to the investors by Sahara group and meeting the deadlines, have gone unheeded by the Chairman, Subrata Roy.

Case Positioning and Setting

The case can be used for Second year MBA students for the courses like Financial Institutions & Markets and Investment Banking to elaborate the following themes.

• Fund raising through Primary Markets
• Role of Regulatory and Intermediaries in the IPO
• Regulations related to NBFCs and RNBCs

Expected Learning Outcomes

• Understand the role of financial regulators (SEBI) in fund raising activities in Primary Markets
• Understand the process of Initial Public Offer for equity and debt
• Understand the role of financial intermediaries in the Primary Markets
• Understand the regulations related to NBFCs and RNBCs

Assignment questions

I. Do you think that Sahara Pariwar flouted the corporate governance norms?
II. Was it right for Sahara group to mobilize money from the public under the generic name of Sahara
Pariwar and Sahara India Pariwar?
III. Do you think that Sahara Pariwar defrauded its investors in the case concerned?
IV.............

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Product code: BFS-2-0019, BFS-2-0019A

Abstract

Cases of corporate governance debacle are not new globally or in India. Sahara India Pariwar, as is popularly known through its two companies over a period of time swindled a huge INR 24000 crore from its investors through Optionally Fully Convertible Debentures OFCDs). Two of its group companies Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) started collecting subscription through OFCD from 25th April 2008 to 13th April 2011. Surprisingly and interestingly, no investor on any occasion knocked the doors of the police or the court until October 2010, when two the investors filed application with Securities and Exchange Board of India (SEBI). SEBI and the Supreme Court's jurisdiction w.r.t refunding crores of rupees to the investors by Sahara group and meeting the deadlines, have gone unheeded by the Chairman, Subrata Roy.

Pedagogical Objectives

  • To understand the role of financial regulators (SEBI) during fund raising in Primary Markets
  • To understand the process of Initial Public Offering/ Debt Issue
  • To understand the role of financial intermediaries in the Primary Market

Case Positioning and Setting

The case can be used for Second year MBA students for the course Financial Institutions & Markets and Investment Banking to elaborate the following themes.

  • Fund raising through Primary Markets
  • Role of Regulators and Intermediaries in the IPO
  • Regulations related to NBFCs and RNBCs



This Case Pack Includes:
- Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)
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