The Securities and Exchange Board of India (Sebi) has asked Saradha Realty to wind up operations within three months. It also barred the company, as well as its managing director Sudipta Sen, from the capital markets till all the company's investors were refunded their money.
"Saradha Realty India Ltd and its Managing Director, Sudipta Sen, to wind up its existing collective investment schemes and refund the money collected by it under the schemes with returns that are due to the investors, according to the terms of offer, within a period of three months from the date of this order," the order said.
After the refund is over, the company would have to file a winding-up and repayment report to Sebi.
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Today's order comes exactly three years after Sebi had first learnt of the Saradha scam. In a letter dated April 23, 2010, the Director, Economic Offences Investigation Cell, West Bengal, had informed the regulator that Saradha Realty India was collecting money from the public, especially in rural areas of West Bengal. The letter was accompanied by a brochure detailing the mode of mobilisation of funds. Saradha group had raised money through collective investment schemes that promised returns to investors through various modes, including realty.
After the tip-off, Sebi had sent many letters, asking the company to clarify the issues raised. These letters included those dated June 3, 2010; July 14, 2010; August 13, 2010; October 12, 2010 and November 3, 2010.
Today's Sebi order said, "The notice, however, did not furnish the desired information, in terms of the notice issued to it. It was noted that the notice had furnished voluminous and irrelevant information." Saradha tried to delay the proceedings and mislead the regulator by sending a "large number of boxes/cartons filled with irrelevant documents as a tactic to delay the proceedings", the order stated.
If Saradha fails to comply with Sebi's directive on the refund, the regulator would consider initiating prosecution and adjudication proceedings. It might also take other steps such as filing a reference to various government agencies for apparent offences of fraud, cheating, criminal breach of trust and misappropriation of public funds, the order said.
Today, Sen, along with other company officials, were arrested from a hotel in Sonmarg, Kashmir.
HOW THE LAW CAUGHT UP WITH SARADHA REALTY
- April 23, 2010 Director Economic Offences Investigation Cell, Government of West Bengal, tips off Sebi on Saradha Realty India
- 2010 Sebi writes to Saradha, asking for its version on the issues raised
- 2011 Trinamool MP Somen Mitra wrote to the Prime Minister, demanding urgent measures against the proliferation of the chit fund business in West Bengal, mentions Saradha
- April 1, 2013 Saradha denies running collective investment scheme
- April 10 Sudipta Sen leaves Kolkata
- April 23 Police catches him in Jammu & Kashmir. Sebi passes order asking him to wind up operations