SEBI team on Sahara has still far to go

March 4, 2014

Sachin P Mampatta  |  Mumbai  

The phones at SEBI Bhavan, headquarters of the Securities and Exchange Board of India, have been ringing insistently since The Supreme Court (SC) ordered the arrest of SaharaGroup chief Subrata Roy in the Rs 24,000-crore illegal fund-raising case. After seeing the television images of the Sahara chief in custody, investors are calling to see how long it would be before they get their money back.

No time for celebrations However, the SEBI team handling the Sahara affair is not celebrating. They see a long haul ahead, with a multitude of investors still to be identified and fresh investigations into the source of Sahara’s funds also on. “The team is not likely to be disbanded for a long time,” said a person familiar with the matter.

The group of SEBI officials has come a long way from the time in Navi Mumbai where they first began to process Sahara’s truckloads of documents, in the second half of 2012. This was two years after the regulator passed an order in November 2010, asking two group companies, Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corporation (SHICL), to stop their fund-raising. It was felt there were irregularities, a view the SC endorsed in August 2012, when it asked the group to refund investors through the regulator and provide it with all the necessary information.

Sahara responded with 300 million documents a few months later. A team of around 25 officials moved to Navi Mumbai to process these; SEBI’s head office lacked the space and the spacious confines of Stock Holding Corporation of India (SHCIL), once used to store physical share certificates in the times before dematerialisation took off, became the de facto point of  operations.

Today, the team works from both places. SHCIL is used for processing of documents and the Bandra-Kurla Complex office for dealing with the other parts of the case. Refunds are still proceeding at a snail’s pace, due to difficulties in identifying investors.

The team has been pursuing a number of different angles, including investigating where the group’s money comes from. In sum, the SEBI team believes the Sahara affair is very much a work in progress. After all, the phones are still ringing.