Sebi investigates 100 'mini-Sahara' schemes

Rs 2,200 crore collected by deemed public issues

The Securities and Exchange Board of India (Sebi) has issued orders in a number of deemed public offerings where investors were offered securities in the guise of private placement but were in fact public issues that did not follow the norms.

A senior Sebi official said the number of such cases was on the rise. "We have passed over 100 orders by now. It has has been a difficult task," he said.

According to a report by the Press Trust of India, the amount collected by illicit schemes in 2014-15 and investigated by Sebi was Rs 13,000 crore. These include over 100 cases of deemed public issues, involving over Rs 2,200 crore, and more than 45 cases of illicit collective investment schemes involving over Rs 9,500 crore.

In a private placement securities are offered to a select number of investors. If the number exceeds 49, the issue becomes a public one inviting more disclosures.

The regulator had moved against the Sahara group on the grounds that it had made a public issue of its debentures under the guise of private placement. The company had placed debentures with 30 million investors.

"The two (Sahara) companies, in raising money from the public have not complied with investor protection measures. Scrutiny carried out by Sebi-registered intermediaries on any public issue has been subverted," said the June 23, 2011, order issued by former Sebi member K M Abraham.

The regulator issued similar orders as recently as Friday. Half-a-dozen separate orders in matters related to deemed public issues included those in the cases of Everlight Realcon Infrastructure, Tresty Securities, Real Vision International, Real Agri Industries and Services, Hum Projects and KKDIL Nidhi Limited. The total amount involved had probably run into thousands of crores, the Sebi official said.

In some of these cases, the companies and their directors were not easily found. After an initial response from Everlight Realcon Infrastructure, the company could not be located. The regulator has barred the company and its directors as well as asked them to refund investor money. Similar orders were passed against other companies too.

An email sent to a Sebi spokesperson did not immediately receive a reply.
CRACKING THE WHIP

• Sebi has busted more than 150 cases of fraud against gullible investors involving close to Rs 13,000 crore in FY15
• These include around 100 cases of deemed public issues, invo-lving an amount of Rs 2,200 crore
• As many as 45 cases of illicit Collective Investment Schemes (worth over Rs 9,500 crore)
• The regulator had moved against the Sahara group on the grounds that it had made a public issue of its debentures under the guise of private placement. The company had placed debentures with 30 million investors
• Half-a-dozen separate orders in matters related to deemed public issues included those in the cases of Everlight Realcon Infrastructure, Tresty Securities, Real Vision International, Real Agri Industries and Services, Hum Projects and KKDIL Nidhi Ltd