Sebi clamps down on 40 illicit fund-pooling schemes

These companies raised nearly Rs 1,500 cr flouting public issue norms

Taking strict action against unauthorised money pooling schemes, capital markets regulator Sebi has clamped down on over 40 companies so far this year for raising nearly Rs 1,500 crore from the public.

Most of the companies garnered funds by issuing preference shares and non-convertible debentures to investors without complying with the public issue norms, Sebi has found.

Under the public issue norms, these firms were required to list their securities as the shares were issued by each company to more than 50 persons.

They were also required to file a prospectus, among other things, but they failed to do so.

In addition, some of the companies mobilised money through unregistered Collective Investment Schemes (CIS).

Since the beginning of the year, Sebi has taken action against 43 companies, according to an analysis of data available with Securities and Exchange Board of India (Sebi).

Collectively, these firms have mobilised Rs 1,479 crore from more than 5.2 lakh investors.

Sai Prasad Corp and GCA Marketing garnered funds to the tune of Rs 615 crore and Rs 428 crore from investors respectively through CIS, while Ramel Real Estate and Infrastructure raked in Rs 75 crore by issuing securities to investors without complying with public issue norms.

Other firms facing regulatory actions include Amrit Projects, Vikdas Industries, Everlight Realcon Infrastructure, Golden Heaven Agro Project India, Hooghly Agrotech, Skylark Land Developers and Infrastructure India, Prism Infracon, Dreamland Industries and Suvidha Land Developers India.

Of 43 firms, Sebi has ordered 29 companies to refund the money, along with interest, raised fraudulently from public.

Besides, these companies and their directors have been prohibited from the capital markets for four years.

In the remaining 14 cases, Sebi has barred those companies and their directors from the capital markets till further orders. They have also been directed through interim orders not to raise further funds through the issuance of securities or mop-up money through existing CIS.