Sebi to rope in drum-beaters, loudspeakers for fraudsters

Fraudsters and defaulters who have failed to return investors’ money may soon see at their doorsteps people with drums and loudspeakers announcing summons to them, as also attachment and sale of assets seized by regulator Sebi for recovery of funds.

Sebi, which was given powers to attach properties in the wake of large-scale defaults by entities collecting money fraudulently from gullible investors, plans to rope in third- party agencies “for providing services of affixture of notices /summons and public announcement of proclamation of attachments, sale notices, etc” at all its offices.

These agencies, which can be registered asset reconstruction companies, reputed NBFCs or detective and other professional agencies having a good track record of recovery work, will need to affix the orders, notices, summons and other communications at addresses provided by Sebi.

“If, at the time of affixture, the addressee is found to be available at the address the order/notice/letter/summons/ etc may be served personally on the addressee,” Sebi said.

Besides, these agencies will have to “make a proclamation of attachment/sale at or nearby the attached property, by beat of drum or by public announcement through loudspeakers,” the regulator said.

Sebi said it can consider issuing necessary directions or instructions to the defaulters or the revenue and local authorities to extend assistance to the agency in the process. In a notice inviting expression of interest (EoI) from the interested parties to provide these services, Sebi said the services would be required at the regulator’s head office in Mumbai as also at its four regional offices.

The affixture services would have to be completed within the stipulated time, said Sebi which is faced with a daunting task of recovering thousands of crores or rupees from various individuals and companies that have duped investors of their hard-earned money with promise of huge returns.

Sebi has been passing orders actively against these entities, including for attachment of their properties, but the recovery process mostly tends to be long-winding.

The regulator said the affixture of the orders and summons would need to be done in presence of two independent witnesses of same locality and would need to be photographed.

The selected agency would be responsible for identifying the assets attached by Sebi, based on the information provided by the regulator.

If the agency is not able to complete the process of affixture or proclamation for reasons such as incorrect address, objection to affixture by the occupant of the premises, it would have to submit a report to Sebi with detailed reasons for failure, attested by two independent witnesses from the locality.

Listing out eligibility criteria, Sebi said that agency should be registered under Companies Act. It should be an Asset Reconstruction Companies or Non-Banking Finance Company or company engaged in recovery related work in the government and semi-government sector.

Besides, the interested party should be a detective agency or a professional specialist firm having a good track record as a recovery agency empanelled with other banks, postal and courier agencies. Sebi wants the the agency to have prior experience in similar areas for the last three years. Interested agencies will have to send application to Sebi by November 15.

The agency will be paid the charges as discovered on evaluation of price bids received for each of the services, and as per a specified criteria to ascertain the payment including for the local and outstation work.