Regulator Sebi Thursday barred Kareena Infotech and its director from capital markets for three years for luring investors with assured daily returns of Rs 2,000 for five days in a week on annual investment of Rs 100,000.
"Kareena Infotech collects a lump sum amount of Rs 100,000 towards a 'trading plan' and pursuant to the same, pays its clients an assured sum of Rs 2,000 on daily basis for 5 days in a week.
"...if such repayment as promised by Kareena Infotech in its sample Investment Agreement is made, a client stands to get up to Rs 520,000 a year in return for every Rs 100,000 invested by him," the Securities and Exchange Board of India (Sebi) said in an order.
As per Sebi, solicitation of funds coupled with the promise of guaranteed returns on investments in the market as made by the firm and its director to their clients, was incorrect and deceitful.
"This clearly resulted in 'fraud' as defined under the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices)regulations, committed by Kareena Infotech and its director, which in turn affected the interests of investors in the securities market," the regulator said.
By indulging in such activities, the company and its director have contravened the provisions of the PFUTP regulations.
Earlier in 2016, the markets watchdog, through an interim order, had barred the firm and Pillai from capital markets in the same case.
In a separate order on Thursday, the regulator has imposed a penalty of Rs 400,000 on Smiths & Founders (India) Ltd for not complying with the 25 per cent minimum public shareholding norm.
As per Sebi, the company promoters' holding dropped to 27.59 per cent at the end of September 2018.
However, the regulator found that the company's promoters reduced their shareholding by direct sale in the secondary market. Such a method is not prescribed under Sebi's norms, it added.