Sebi prosecuting 565 firms for illegal money collection

Regulator released list of entities on May 25 who have mopped-up money through collective investment schemes promising huge return to investors

Cracking a whip on the perpetrators of illegal money collection schemes, the Securities and Exchange Board of India (Sebi) has launched  565 prosecution cases against those collecting public money in this manner and as many as 1,000 other cases for violation of securities norms.

The markets regulator had on Wednesday issued a list of entities which have taken money through collective investment schemes, promising huge return to investors.

Sebi has powers to take on such fraudulent schemes and to regulate all kinds of investment schemes involving a corpus of Rs 100 and more. The proceedings include seizure of bank/demat accounts, movable and immovable properties. In the Saradha Realty case in Bengal, Sebi had  passed an order against the company in April 2013, soon after massive protests by public investors. The company was asked by Sebi to refund the investors’ money, among other strictures.

The investigation has concluded that these were ponzi schemes — arrangements where the primary source of payment to subscribers is the collection made from newly enrolled members, rather than from income generated from investments. The Securities Appellate Tribunal is also hearing several cases filed by the regulator.