Sahara Housingfina Corp., controlled by the owner of New York’s Plaza Hotel, dropped the most in more than two years after India’s market regulator froze the bank accounts of group companies and directors including founder Subroto Roy.
The Securities and Exchange Board of India yesterday ordered banks to freeze the accounts of Sahara Housing Investment Corp. and Sahara India Real Estate Corp., their founders and directors for failing to refund money raised from the public, which the regulator said flouted debt-sale rules.
Sahara Housingfina plunged 15 percent to 46.25 rupees at 11:17 a.m. in Mumbai, its biggest drop since Nov. 25, 2010. India’s Supreme Court on Aug. 31 asked the Sahara group companies to repay the 174 billion rupees ($3.2 billion) raised through selling optionally fully convertible debentures as it didn’t comply with rules. The court authorized SEBI in September to seize the group’s assets should it fail to comply.
“There are no options for Sahara,” said Sandeep Parekh, founder of Finsec Law Advisors and a former SEBI executive director. “ They can only seek extension of time from Supreme Court and then pray. This is the first time SEBI has attached a company’s assets.”
Sahara said in a statement yesterday that the SEBI order is “based on old facts” and that it has filed an application in the Supreme Court saying it has already redeemed a “significant” amount and any further payment to SEBI would be “double payment.”
Group company Sahara One Media & Entertainment Ltd. fell as much as 4.8 percent to 82.1 rupees.