SAHARA-THE

SEBI SCAM
S Sandeep
Corizo-Stock Market
(July Batch)
Minor Project
 About The Company
• Sahara India Pariwar is an Indian Conglomerate (a
large firm made up of several different
companies)company.

• It was first started as an “chit company” by Subrata Roy

(the Saharashri).
• It deals with different sectors of business such as real
estate, media & entertainment, sports, health care,
finance, retail and many more.

• It was the major title sponsor of Indian national

cricket team.

• In 2004, it was also termed as “the second largest

employer” in India after Indian railways.
 The Initial

• The Scam started to come into light after which the

company decided to make two of its subsidiaries public.
These Subsidiaries were Sahara Prime City
Limited(SPCL) & Sahara Housing Investment
Corporation Limited(SHICL).
• As of which if a company wants to go public there are
certain number of things to be revealed, like submitting
disclosures, which tells where the company has been
raising funds from and what it proceeds with that fund.
The company has to submit the audit accounts as well.
This is where people started to ask questions!
• The SEBI started to look into the structure of the company
where it found that the company was not looking good, as
it appeared that the Company was not being transparent
who their investors are and under which they get their
money back!
 THE
SCAM
• The Sahara Group raised fund by issuing debentures to
the public by promising high returns in the name of
OFCDs (Optionally Fully Convertible Debentures).

• SEBI contended that Sahara has raised a significant

amount of money from millions of investors without any
proper regulatory approval.

• SEBI initiated legal proceedings against Sahara in order

to address these alleged violations
• The case came to Supreme Court; Where Sahara has been
directed to submit a complete detailed account of the fund
raised through OFCDs & was also been ordered to refund
the money to the investors with interest.

• The court also imposed penalties on Sahara for non-

compliance, which is said to be the biggest penalty ever in
India.
 • After the Scam SEBI has enhanced
How Things its Rules and Regulations ensuring
that the companies adhere to the
Got securities laws and regulation
more rigorously, This scam has
Changed resulted in changes aimed at
preventing future fraudulent
After This activities and ensuring a more
secure investment environment.
Scam
 How Market Reacted To
The Scam
• The Markets response towards the Sahara-SEBI case
initially was with a sharp decline of Stock price.
Investors started to panic and sold-out their shares. The
Stock’s price hits the bottom.

• However, regulatory interventions, reassurance measures,

and investor education gradually stabilized the market.
As more information emerged, investor confidence
started to return.
• Sahara even conducted an event by assembling the
largest number of people (Employees who were hired
by Sahara) in one place to chorus the national anthem.
It is said that, it was an act to connect investors
emotionally.
• The loop hole which Sahara used was OFCDs. Sahara Argued that
the fund which was raised through OFCDs are Private in nature
and was not provided to the public. It contended that these
transactions are of private agreements between the company and
its subscribers, and thus, they were not obligated to follow the
same regulatory framework that applies to public offerings of
securities.

THE LOOP HOLE &

THE FIX
• SEBI on the other hand argued that the Sahara Group had
raised a substantial amount of money from a large number of
investors, which qualified as a public issue of securities,
irrespective of the terminology used by Sahara to describe the
transactions.
• However, by making the legal proceedings and outcomes
transparent and accessible to the public, the closure of the
alleged loophole was effectively communicated. This
helped to build trust in the regulatory system and
reinforced the importance of compliance with securities
regulations to protect investors' interests.