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SC lashes out at Sahara, directs Sebi to examine OFCDs

SC lashes out at Sahara, directs Sebi to examine OFCDs
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First Published: Thu, May 12 2011. 02 57 PM IST
New Delhi: In a boost to India’s capital market regulator, the Supreme Court directed the Securities and Exchange Bureau of India (Sebi) to proceed with its investigation into financial instruments being used by two Sahara group companies to raise money from the public.
The court dismissed Sahara’s claims, saying that the crux of the issue lies in the true meaning of Optional Fully Convertible Debentures or OFCDs, used by Sahara to collect public money.
”Why are you afraid? Let Sebi give its judgment. It is an expert body. We want to know what are OFCDs,” said a bench led by Chief Justice S. H. Kapadia, before empowering Sebi to proceed with its probe.
Sahara and Sebi have been involved in a tussle spanning over eight months, with the former attempting to evade the jurisdiction of the latter, on the ground that the investments are private placements.
Sebi regulations mandate a company to be listed if the number of private placements exceeds 50. Sahara, admittedly, has about 6.6 million investors.
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First Published: Thu, May 12 2011. 02 57 PM IST