SAT gives boost to Sebi CIS orders

The Securities Appellate Tribunal (SAT) upheld three orders against Collective Investment Schemes on Tuesday, endorsing the Securities and Exchange Board of India's recent drive against such schemes.

It supported Sebi orders against Maitreya Services Private Limited, NGHI Developers India Limited and Alchemist Infra Realty, which collectively raised money from over four million investors.  The tribunal granted the entities additional time to repay the amounts collected in light of issues involved in making a repayment to the large number of investors involved.

“Now, keeping in view the large number of investors involved, i.e., around two and a half million, and the long and tedious process of implementing the scheme of repayment involved…we are inclined to grant them a longer period of time than that provided by Sebi…” said the SAT order in the matter of Maitreya Services. The tribunal provided for another six months to do so.

It made a similar observations in the case of NGHI Developers and Alchemist Infra Realty.

A six-month period has also been granted to NGHI Developers India Limited which had thirty thousand investors. The tribunal granted an 18-month window in the case of Alchemist Infra that had one-and-a-half million investors and sought five years to repay them all.

The tribunal added that the entities can approach Sebi for any further extension.

The tribunal has also asked they provide updates on the progress of the repayments at regular intervals to Sebi.

“In case any eventuality arises in future for the appellants to seek further extension of time to implement Sebi’s order in question, the appellants may approach Sebi for extension of time and Sebi will consider the same and pass an appropriate order…” it said.

The regulator recently moved against collective investment schemes, issuing orders against dubious schemes that looked to raise money from investors for schemes involving everything from real estate to potatoes and dairy operations.
HIGHLIGHTS

• SAT asks collective investment schemes to repay investors
• SAT upheld Sebi orders against Maitreya Services, NGHI Developers and Alchemist Infra Realty
• Over four million investors to be repaid
• SAT grants additional time for repayment