Sebi orders refunding 3,000 investors in illicit funds case

Sebi has ordered Shree Sai Spaces Creations and its four directors to refund money worth Rs 4 crore to more than 3,000 investors for illegally raising funds in the garb of solar energy projects.
The latest action by the market watchdog follows the company failing to comply with earlier directions to refund the money. Besides, attachment of properties and assets did not yield enough money to repay the investors.
To ensure that affected investors receive their money along with returns in due course, Sebi has come out with a multi-step refund roadmap for the firm and its directors.
The company had launched collective investment schemes for its 'joint venture participation project for solar energy generation' without prior approval of Sebi.

"I note that the defaulter company mobilised funds illegally from more than 3,000 investors' and the amount involved is in crores, all the assets and bank balances are in the names of its directors and not a single rupee is held in the name of the company," Sebi's Recovery Officer and General Manager D V Sekhar said.
"This is nothing but diversion of funds by the company to the promoters leaving no assets in the name of the company," he said in the order dated July 4.

Within a month, the defaulters have been asked to raise Rs 1.30 crore which would take the corpus to Rs 1.74 crore, that includes money in banks and mutual funds.

Then, they have been asked to repay the investors in a step-by-step manner spread over another five months.
The total amount involved is little over Rs 4 crore.
Sebi also rejected the company's plea seeking 24 months' time for sale of assets in order to refund the investors.
All the entities have been barred from selling their assets, except for refunding purpose.
Once the refund is complete, the company and its directors have to furnish a winding up and repayment report (WRR).
In 2014, Sebi barred the entities from collecting money from the public and ordered winding up of all their collective investment schemes apart from repaying the investors.

Thereafter, Sebi had attached various bank and demat accounts of the defaulters but the funds were found to be insufficient to make the refunds.