SEBI rejects Anil Ambani’s settlement plea over Yes Bank investments
The charges predate the sale of Reliance Mutual Fund to Nippon Life Insurance in 2019
The Securities and Exchange Board of India (SEBI) has rejected a plea by industrialist Anil Ambani (younger brother of Mukesh Ambani) to settle charges on investments in lender Yes Bank. This exposes him to a penalty of Rs.18.28 billion ($208.4 million).
The case relates to the amount invested by Ambani’s Reliance Mutual Fund (RMF) between 2016 and 2019 in Yes Bank’s additional tier-1 bonds, which were written off in 2020, when the bank was declared insolvent.
In 2019, RMF was sold to Nippon Life Insurance, and charges predate the sale.
The market regulator’s investigation stated that the investment was made in exchange for loans from Yes Bank to Ambani’s other group of companies.
Thus, while rejecting his pleas to settle the charges without admitting guilt, SEBI marked that the fund’s resulted in a Rs.18.28 billion loss of investor wealth and had a ‘market wide impact’.
Ambani has been facing renewed scrutiny of dealings between his firms and Yes Bank, which, after insolvency, was rescued by a group of lenders in a plan approved by the Reserve Bank of India (RBI).
Recently, the Enforcement Directorate (ED), India’s top crime-fighting agency, searched several locations linked to the group as part of a scheme to siphon off Rs.30 billion in loans from Yes Bank,
Meanwhile, a proposal by Ambani, his son Jai Anmol Ambani, and former Yes Bank chief executive Rana Kapoor, to settle the charges has not been accepted.
Ambani and his son have been apprised by the regulator about directions asking them to compensate the investors. And additional action could include monetary penalties.
Meanwhile, SEBI has shared its findings with the ED. Its investigation revealed that Ambani influenced investment decisions by RMF.
The regulator stated, “It is alleged that Anil Ambani and Jai Anmol Ambani had influence and control over Reliance Mutual Fund investment in Yes Bank’s additional tier-1 bonds through Sundeep Sikka, chief executive of the fund house and chief investment officer.”
The notice cited meetings between Ambani and fund house executives at the time of the investments. It also mentioned emails where Kapoor characterised investments in Reliance Group entities as a ‘bilateral relationship deal.’
Thus, SEBI charged the fund house, its chief executive, chief investment officer and former chief risk officer for alleged losses to investors.
Meanwhile, the four entities have filed separate settlement applications of Rs.950 million, which are under consideration.
SEBI added, “There were lapses and non-compliance in adherence with the laid down internal policy and procedure and also bypassing the internal risk/control framework while enhancing the sub-limit and making the investment.”