Sebi asks KBCL to wind up CIS scheme, refund investors

The Seb found that the company was running a 'collective investment scheme' (CIS) without requisite approvals and registration

Pulling the plug on an unauthorised investment scheme run by KBCL India in garb of realty business, market regulator Sebi today asked the company to wind up the scheme as well as refund the money with returns to investors within three months.

The Securities and Exchange Board of India (Sebi) found that the company was running a 'collective investment scheme' (CIS) without requisite approvals and registration.

In an order, Sebi also prohibited the company from collecting any funds from investors or carrying out any CIS.

Besides, the regulator has barred KBCL India and its directors from the securities market till all the CIS are wound up by it and all the funds mobilised through such schemes are refunded to investors.

The regulator had received several complaints, alleging illegal mobilisation of funds to the tune of Rs 118.69 crore through activities in the nature of CIS by KBCL.

KBCL had launched a scheme for the purchase and development of plot/land inviting investment from the public.

Based on material available on record, Sebi had observed that the scheme by KBCL "does not show any resemblance to real estate business or transaction but rather operates as a disguise to mislead and attract investment from the general public towards the fund mobilising activity of KBCL".

In its today order, the regulator said, "KBCL India and its directors--Rakesh Kumar, Vishvnath Pratap Singh and Shashi Kant Mishra--shall wind up the existing CIS and refund the money collect by the said company under the schemes with returns which are due to its investors...Within a period of three months from the date of this order and submit a winding up and repayment report to Sebi."

The company and its directors are "restrained from accessing the securities market and are prohibited from buying, selling or otherwise dealing in securities market till all the CIS are wound up by it and all the money mobilised through such schemes are refunded to its investors with returns which are due to them.