SEBI said that that Sahara AMC is not ‘fit and proper person’ to operate in the Indian securities market.
Market
regulator SEBI has turned down Sahara AMC’s application to renew its portfolio management license
on the grounds that the company is not ‘fit and proper person’ due to the
various litigations against its promoter company Sahara group. The order was
passed by S Raman, Whole Time Member, SEBI today.
As on January 2015, Sahara AMC had 6 clients with AUM of Rs. 76 lakh under its PMS business.
Sahara, in its reply to SEBI said that even though various proceedings are pending against certain Sahara group entities, no regulatory action have been initiated or pending against Sahara AMC before any Court/Tribunal/Authority. Further, it said that the provisions of Portfolio Managers Regulations and Intermediaries Regulations do not provide for SEBI to take into consideration the criteria in relation to 'promoters' of Sahara AMC for determining whether the applicant is 'fit and proper person'.SEBI, in its reply to Sahara said, that the AMC was directed to submit details pertaining to the shareholding of its promoter companies. However, the information has not been provided by Sahara AMC.
“For the purpose of determining whether Sahara AMC is a 'fit and proper person', the criteria .. shall be extended to include Subrata Roy Sahara since through SIFCL, he exercises substantial controlling interest entailing significant influence in that company and also through the other Promoter Companies,” stated the order.
“Keeping Sahara AMC in the mainstream market after considering the antecedents of Subrata Roy Sahara and some other companies of the Sahara group, may cause prejudice to the interests of investors and the safety and integrity of the securities market. I am, therefore, of the firm opinion that the applicant is not a ‘fit and proper person’ to act as a Portfolio Manager in the Indian securities market,” stated SEBI order.
SEBI has directed Sahara AMC to either transfer its business to another SEBI registered portfolio manager within thirty days from the date of cancellation of Certificate of Registration or allow the client to withdraw the securities and funds in its custody, without any additional cost to the client.