Sebi warns public against illicit money pooling schemes

Mumbai: Making public a list of 63 companies running illegal money pooling schemes, regulator Sebi today cautioned investors and general public against dealing with such entities and not be lured by promises of high returns.

The latest list released by Securities and Exchange Board of India (Sebi) today is an expansion to the previous one in December, 2014, wherein it had named 51 entities.

The warning to investors comes after Sebi observed that certain entities were mobilising money through illegal investment schemes even after the regulator had directed them not to raise any further money and not to launch any new schemes, among others.

“These companies/entities without obtaining registration are illegally collecting/mobilising money, from investors by making false promises, assuring unrealistic return, etc,” the regulator said.

Accordingly, listing out 63 entities, including many based from West Bengal, Sebi has issued a caution to the investors and general public not to invest in illegal schemes offered by such companies that claim to offer much higher returns than banks and other registered entities.

Sebi has asked the investors to report unauthorised money pooling activities to the market regulator, state authorities including police “immediately, along with appropriate details/documents”.

The market regulator, since January 1, 2011, has passed orders against 63 entities and their respective directors carrying on unregistered ‘Collective Investment Schemes (CIS)’.

Of these, about 46 orders have been passed in 2014 alone.

Sebi has asked the investors to report unauthorised money pooling activities to the market regulator, state authorities including police “immediately, along with appropriate details/documents”.

The list of entities banned by Sebi from raising funds include names like Saradha Realty India, Rose Valley Real Estate & Constructions, Sai Prasad Properties, PACL, Sumangal Industries, MVL Ltd, KBCL India, Nicer Green, Alchemist Infra Realty, HBN Dairies, Kim Infrastructure & Developers.

Sebi has been given greater powers to deal with the ponzi menace, which typically involves money being raised from investors with promise of high returns and old investors being given returns from funds collected from new subscribers to such schemes.

As part of interim directions, Sebi directs the entities and its directors to stop collecting further money under any schemes, not to launch any new scheme or float any new companies/firm to raise fresh moneys, not to divert or alienate any assets or money collected.

Through its final directions, Sebi debars the company and its directors from accessing the capital markets, the regulator said, while explaining its enforcement procedures against such entities.

Sebi further said that Gift Collective Investment Management Company Ltd is the only company registered with it to undertake CIS activities.

PTI