Sebi turns down Sahara AMC plea to renew portfolio management services

The Securities and Exchange Board of India (Sebi) on Thursday rejected Sahara Asset Management Company's plea to renew the portfolio manager licence of the company. Sebi rejected this plea on the grounds that it was not "fit and proper" for this business.

The market watchdog in February had cancelled the registration of Sahara Asset Management Company (AMC) as portfolio manager.

Subsequently in March Sahara had requested Sebi to reconsider the decision through an application.

Rejecting the application, Sebi had said that the company no more meets "fit and proper criteria" to continue as a portfolio manager in Indian securities market.

In an order dated December 30, Sebi said it has "no hesitation in concluding that Sahara Asset Management Company does not comply with the eligibility criteria of being a 'fit and proper person' in accordance with the Portfolio Managers Regulations... in view of the substantial controlling interest entailing significant influence over Sahara AMC, exercised by Subrata Roy Sahara, through the promoter companies of that applicant".

For a "fit & proper person" criteria the regulator takes into account the financial integrity, honesty, good reputation and character of the applicant.

Sebi in the fifteen-page order considered the orders passed by the regulator and various courts against Subrata Roy's Sahara and other companies of the Sahara Group.

The market watchdog feels that allowing Sahara into the capital markets may cast a shadow on the integrity of the securities market.

Further, Sebi said it did not find any reason to interfere with its order passed in February and accordingly, rejected the application for reconsideration, submitted by Sahara AMC.

"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 also in view of the subsisting action against Subrata Roy Sahara and companies of the Sahara group," said S Raman, Whole Time Member, Sebi.