Sebi writes to MCA on PACL

The regulator got tips that PACL was still collecting money from the public in some parts of the country

 

The capital markets regulator, Securities and Exchange Board of India (Sebi), has written to the ministry of corporate affairs, to hasten the winding-up process of Pearl Agrotech Corporation Ltd (PACL).

According to sources, Sebi wrote to the ministry earlier this month alerting it that in spite of passing an order against the company and barring it from raising any more funds from the public, PACL was still collecting money.

Sebi, too, has initiated further investigation into the matter.

"During our survey and investigation, we realised that the company had several agents in different areas of Uttar Pradesh, Bihar, Uttarakhand, Maharashtra and Ahmedabad who are still peddling the scheme," said a source.

QUICKER ACTION RECOMMENDED

• The capital markets regulator, Securities and Exchange Board of India (Sebi), has written to the ministry of corporate affairs, asking it to hasten the winding-up process of Pearl Agrotech Corporation Ltd
• According to sources, Sebi wrote to the ministry earlier this month alerting it that in spite of passing an order against the company and barring it from raising any more funds from the public, PACL was still collecting money
• "We realised the company had several agents in different areas of Uttar Pradesh, Bihar, Uttarakhand, Maharashtra and Ahmedabad," said a source
• Investors are reviewing their allocations, moving money to competitors such as Vanguard Group Inc and DoubleLine Capital LP or parking it in money-market funds and exchange-traded funds while they reevaluate.
• The largest daily redemption in September came on the day of Gross’s departure

In the letter to the Serious Fraud Investigation Office, the regulator asked the ministry to take action against these agents and expedite the proceedings to wind up the operations of the company.

The reference from Sebi on the case has also been forwarded to the finance ministry and Central Bureau of Investigation (CBI). The CBI has been directed to conclude investigation in the matter in a timely fashion.

Sebi is also likely to issue an advisory to investors to caution them against the scheme.

Email queries to PACL and subsequent reminders did not get any response.

In August, Sebi had passed an order against PACL, asking the firm to refund around Rs 50,000 crore raised from 58.5 million customers within three months. The deadline has expired.

In Sebi's 92-page order, the total amount mobilised by the company, "by its own admission" comes to a whopping Rs 49,100 crore and "this figure could have been even more if PACL would have provided the details of the funds mobilised during the period of April 1, 2012 to February 25, 2013."

The Sebi order states that PACL operated a land investment scheme, which qualified as a collective investment scheme, without proper registration.

The order also mentions that investors failed to receive any land even after years of investments into schemes offered by PACL.

In February this year, CBI registered a First Information Report against Nirmal Singh Bhangoo, promoter of PACL, as it found the company was running an alleged scam worth Rs 45,000 crore.