Illegal CIS: Sebi fines Arise Bhoomi, directors Rs 1 crore

Markets regulator Sebi Friday levied a total fine of Rs 1 crore on Arise Bhoomi Developers and its three directors for mobilising funds from small investors through unregistered collective investment scheme.

The directors fined in this connection are Papu Kumar Singh, Ratnesh Kumar Yadav and Ravi Shankar Singh.

In four separate but similarly worded orders, Sebi said it conducted an investigation after it received a complaint from an NGO, alleging that the company was involved in collection of funds from small investors without obtaining approval of Sebi and it mobilised Rs 8.38 crore during 2013-2014.

The probe found the firm was "operating a collective investment scheme (CIS) without obtaining a registration from Sebi", the regulator noted.

Illegal mobilisation of funds through unregistered collective investment scheme by any entity is in violation of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.

The entities "had violated PFUTP Regulations and is liable for imposition of monetary penalty", the regulator said.

Accordingly, Sebi has imposed fine of Rs 25 lakh each on Arise Bhoomi Developers and its directors through separate orders.

Separately, Sebi has slapped a fine of Rs 5 lakh on Parshwa Traders for the execution of non-genuine trades leading to creation of artificial trading volume in illiquid stock options segment of BSE.

"It is established that the Noticee (Parshwa Traders) by indulging in reversal trades on the stock exchange platform which are manipulative in nature, had created artificial volumes in the contracts," Sebi said in its order.

Such practices are violative of PFUTP norms and subsequently the regulator fined the company Rs 5 lakh.