SEC postpones case against Indians running illegal scheme, duo untraceable

The US Securities and Exchange Commission has postponed proceedings against two Indians charged with running an illegal high-yield investment scheme out of India

The United States Securities and Exchange Commission has had to postpone proceedings against two Indians charged with running an illegal high-yield investment scheme out of India targeting overseas investors. They have not managed to serve an order against either Pankaj Srivastava or Nataraj Kavuri. The order extending time for proceedings suggests that the regulator has been unable to locate the duo, believed to be in India. 

The US regulator had passed an order against Srivastava and Kavuri on November 12 this year but was not able to serve the order to the accused, according to a note on the regulator's website. The proceedings against them have now been postponed to mid-2015.

"Respondents, who are believed to be in India, have not yet been served with the OIP(Order Instituting Proceedings)...To allow time for service of the OIP and Respondents’ Answers,1 consistent with 17 C.F.R. § 201.161, the hearing will be postponed sine die, and a prehearing conference will be held by telephone on June 26, 2015," said the order dated December 9.

The duo had floated an investment management company called Profits Paradise and attracted investors with guaranteed daily returns of 1.5-2%. They claimed to generate the returns by trading 'on foreign exchanges as well as in stocks and commodities,' according to the SEC statement on the matter. The SEC also alleged that the returns were fake.

India’s markets regulator Securities and Exchange Board of India (Sebi) had helped track down the software used in the scheme to a Lucknow-based firm. This ultimately helped uncover the identity of Pankaj Srivastava who had been operating under the identity of Paul Allen. Another individual Nathan Jones was also found to be involved, he was later identified as Nataraj Kavuri from Hyderabad.

Emails sent to the SEC and the Securities and Exchange Board of India on Saturday remained unanswered.