Sebi Proceeds Against 8 Plantation Companies

Securities and Exchange Board of India (Sebi) today announced that it has launched criminal proceeding against eight Mumbai-based companies for violations of Sebi (Collective Investment Schemes) Regulations, 1999.

A Sebi official said these companies, which raised several crores of rupees from the investors under various schemes, did not register the schemes with the capital market regulator as it was mandatory under the laws.

In addition, the companies did not pay heed to the Sebi who directed them refund the amounts to the investors after winding up the schemes. The official added that the directors of the said companies had also been prosecuted.

The companies are: Pan India Forest & Land Development, Rainbow Perennial Krishi , Southern Horticulture & Rubber Plantation, Ace Agro Products, Eternal Agro, World View Teak Rich, Green Gold Agro Products and Green Gold Horticulture.

However, Sebi is keeping mum on a similar collective fund raising mechanism flourishing in West Bengal.

Cashing in on falling interest rates and the prevailing downtrend in the stock markets, coupled with large VRS payment cheques in the hands of ex-public sector employees in particular, a number of share traders are promising investors huge assured returns on their investments across the state.

The share traders, claiming to be sub-brokers of members of the Calcutta and National Stock Exchanges, have been collecting funds from investors promising them 60 to 144 per cent secured returns payable monthly.

The promises are made on stamped legal deeds. Business Standard so far tracked down over 60 franchises representing these trading firms across the state.

The firms, which include Citi Securities, Invesco Securities, Indian Securities and Sai Securities to name a few, operate from their headquarters in Kolkata.

Accepting deposits from the public requires permission from the Reserve Bank of India (RBI) but sources said the apex bank was confused on account of the stockmarket linkage of all of these operators. "Action against them was falling between stools," sources said.

Experts say these companies are following a pyramid scheme where one investor is being paid interest from another's principal, and a large number of investors will be hit when the cycle collapses.

A similar formula had been adopted by many chit funds including Sanchayita in the past. When asked a Sebi official had earlier said the apex body was aware of the development and "would surely do something".

Since then nearly six months have passed without any action being taken. Calcutta Stock Exchange authorities had also promised an investigation but internal problems had possible derailed the exercise.