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In a minor reprieve for Sahara Mutual Fund, the Securities Appellate Tribunal (SAT) has stayed SEBI’s order against the asset management company till January 6, 2016.
In July this year, the capital market regulator SEBI had passed an order cancelling the registration of Sahara Asset Management Company.
According to the order, the company’s licence to operate a mutual fund was due to expire by the end of this month. The AMC had been directed to transfer its assets to another SEBI-approved AMC within five months of the order or redeem the fund units to investors and return their money within six months.
Sahara’s appeal against the SEBI order was due to be heard at SAT today. At the hearing, counsel for SEBI submitted a 300-page affidavit, providing new grounds for cancellation of Sahara’s licence. SAT accepted the affidavit and adjourned the hearing to next month.
As of September 2015, Sahara Mutual Fund was managing Rs 124 crore worth of assets. The fund has been struggling to find a buyer for its assets since most its competitors in the highly-regulated mutual fund industry do not want to be exposed to the litigation that Sahara’s assets might bring.
SEBI has cancelled Sahara’s licence pending contempt proceedings against the Sahara group promoter Subrata Roy and two group companies, one of which sponsors the asset management company. As a result, SEBI found that the sponsor is no longer “fit and proper” to carry out the business of a mutual fund.
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