Sebi cracks down on fund pooling scheme

In a related development, Sebi also slapped penalties on two firms for violation of rules.

By: ENS Economic Bureau | New Delhi | Published:August 1, 2014 1:08 am

In its first major crackdown on illegitimate collective investment scheme after the cabinet cleared the Sebi Bill to be taken up by the Parliament in its ongoing session, the Securities and Exchange Board of India passed an interim order barring Pancard Clubs Limited (PCL) and its directors from raising fresh money from investors and restraining them from disposing any property obtained through money raised by the company.

The Sebi order states that the Mumbai-based PCL had raised a total of Rs 3,096 crore in the three year period between 2010-11 and 2012-13 from a total of 24.8 lakh investors under its eight holiday plans. It further stated that the company runs several other schemes and has long-term current liability amounting to Rs 6,263.9 crore. While the company claims to be running time share holiday schemes, Sebi’s investigations have found that PCL has been collecting money from investors and assuring them a certain return on investment, which is in the nature of profit.

Sebi concluded that the plans offered by PCL promised returns and thus, ‘prima facie falls within the ambit of collective investment scheme.’ It therefore ordered PCL and its directors — Sudhir Shankar Moravekar, Shobha Ratnakar Barde, Usha Arun Tari, Manish Kalidas Gandhi, Chandrasen Ganpatrao Bhise and Ramachandran Ramakrishnan to not collect any fresh money from investors under its existing scheme or new schemes.

In a related development, Sebi also slapped penalties on two firms for violation of rules.

A penalty of Rs 62.5 lakh was charged on the promoters of Rajlaxmi Industries for allegedly failing to disclose annual shareholding within the stipulated timeframe. Shree Bhawani Paper Mills was charged Rs 70.25 lakh for failing to make timely disclosure on acquisition of shares.

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