Sebi cancels Sahara AMC registration as portfolio manager

Mumbai, February 27

In fresh trouble for crisis-hit Sahara, regulator Sebi on Friday ordered cancellation of Sahara Asset Management Company's registration as portfolio manager, saying that "antecedents" of Subrata Roy and some group firms may cause "prejudice to the interests of investors".

Rejecting Sahara AMC's application for renewal of license, Sebi said it no more meets "fit and proper criteria" to continue as a portfolio manager in Indian securities market.

Consequently, the Sebi said, it was ordering cancellation of its portfolio manager registration within 30 days, or transfer of its business to another portfolio manager, or allow investors to withdraw their funds and securities.

Sahara AMC, which had applied for this renewal in July 2012, is part of diversified Sahara group that has been engaged in a long-drawn battle with Sebi, which had earlier asked it to refund tens of thousands of crores raised through certain bonds from investors.

The matter eventually reached the Supreme Court, which in August 2011 ordered two Sahara firms to deposit over Rs 24,000 crore with Sebi for further repayment to investors. While a part of these funds have been deposited by Saharas with Sebi, the group claims to have directly refunded over 95 per cent to the investors.

In his 12-page order in the latest matter involving Sahara AMC, Sebi's Whole Time Member S Raman said, "As envisaged in the 'fit and proper person' criteria, Sebi has to take into account the financial integrity, honesty, good reputation and character of the applicant.

"The role of the Portfolio Manager as a market intermediary is indeed very crucial, especially as a portfolio manager handles money kept with him in fiduciary capacity.

"As a regulator of the securities market, Sebi indeed has to take into consideration important facts such as prosecution proceedings, detention order, etc, pending against the persons ultimately controlling or influencing Sahara AMC, while considering its eligibility as a portfolio manager.

"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."

Sahara AMC was first granted a Certificate of Registration as Portfolio Manager by Sebi for three years in October 16, 2006. Thereafter, Sahara AMC was granted a renewal for another three years.

Sebi again received an application dated July 6, 2012, from Sahara AMC for renewal.

After looking into this plea, Sebi informed Sahara AMC in July 11, 2014 that "prima facie it appeared that it was not a 'fit and proper person' eligible for renewal...".

Sahara Mutual Fund had an average AUM of about Rs 147 crore at the end of December 2014. — PTI