Sebi warns public against high returns via illegal schemes
7 Jan 2014 1:59 AM GMT
In a public notice, Sebi observed that some companies or entities are illegally mobilising funds from the public by making false promises of exorbitant rates of return under various schemes.
These companies are also indulging in issuing Cumulative Convertible Preference Shares (CCPS)and Cumulative Redeemable Preference Shares (CRPS) without the necessary authorisation and regulatory approvals, Sebi said.
Schemes made or offered by cooperative societies, deposits accepted by NBFCs, by companies declared as Nidhi or a mutual benefit society under relevant sections of the Companies Act, or pension and insurance schemes framed under the Employees Provident Fund, or chit funds are outside the purview of Sebi's jurisdiction, the regulator said, adding that their returns, therefore, cannot be guaranteed by it. This warning comes in the wake of Sebi receiving complaints and communications from investors with regard to huge returns offered by various cooperative societies, including those linked to entities already under Sebi's scanner.
Sources said certain entities are taking the cooperative society route to garner funds from public investors after being barred by Sebi for running illegal schemes collecting money through various bonds and other securities.
While Sebi has informed the investors concerned that such schemes are not under its jurisdiction, their modus operandi is still being investigated as it has the powers to crack down on all illegal collective investment schemes worth Rs 100 crore or more.
In its public notice, Sebi said that ‘investors are cautioned not to invest in any schemes/arrangements which are unregulated. Sebi does not guarantee the repayment of money by these companies/entities.’
Sinha also said that a greater oversight mechanism on insider trading and a stronger risk management framework were among key focus areas for Sebi in 2014.
He added that Sebi is also planning to bring in new categories of persons including public servants, regulatory officials, judiciary and government officials dealing with unpublished price-sensitive information under the ambit of the rules related to insider trading.
Further, Sebi chairman noted that the new norms ‘would also seek to clearly differentiate between 'innocent mistakes' and genuine transactions of company executives from the unlawful and serious trading offences’.
PHD Chamber Capital Market Committee Chairman Prithvi Haldea said that the corporate systems and processes ‘need to be credible and transparent, so that the interests of the investors may be safeguarded in a manner that enables them to exercise their choice in an informed manner while making investment decisions’.
NSEL default scam: Police file 9,800-page chargesheet
Mumbai: The Mumbai Police on Monday filed a 9,800- page chargesheet against five accused arrested in connection with the National Spot Exchange Ltd (NSEL) scam, which involves a payment default of Rs 5,600 crore. The voluminous charge sheet included the list of attached properties of the arrested and wanted accused, frozen bank account details, information of physical stock available in the warehouses, statements of 297 witnesses, said Joint Police Commissioner (Crime) Himanshu Roy.
The charge sheet, however did not mention the names of the wanted accused. ‘The probe in the case is not yet over. Some more charge sheets will follow in the later stage. One should not feel that we have given anybody a clean chit just because their names did not appear in the first charge sheet,’ Roy said.
‘Jignesh Shah (Promoter and director of the NSEL) is an accused in the case and fully involved in the scam and his name is also there in the FIR,’ the IPS officer said responding to a query. The charge sheet has also thrown a light on the modus operandi of the crime, how management was hand-in-glove with the defaulters, how certain borrowing companies appointed dummy directors, manipulation of books by various companies, Roy added.
The FIR was lodged on 30 September by EOW against directors Jignesh Shah, Joseph Massey and others charging them with cheating, forgery, breach of trust and criminal conspiracy, among other offences.
The spot commodity bourse, promoted by Shah-led Financial Technologies (FTIL), has been facing problems in settling Rs 5,600 crore dues of 148 member brokers, representing 13,000 investor clients. Police suspect equal role of brokers in the scam as many of them have sold NSEL commodities despite having knowledge of the fraudulent practices in the spot exchange.
These companies are also indulging in issuing Cumulative Convertible Preference Shares (CCPS)and Cumulative Redeemable Preference Shares (CRPS) without the necessary authorisation and regulatory approvals, Sebi said.
Schemes made or offered by cooperative societies, deposits accepted by NBFCs, by companies declared as Nidhi or a mutual benefit society under relevant sections of the Companies Act, or pension and insurance schemes framed under the Employees Provident Fund, or chit funds are outside the purview of Sebi's jurisdiction, the regulator said, adding that their returns, therefore, cannot be guaranteed by it. This warning comes in the wake of Sebi receiving complaints and communications from investors with regard to huge returns offered by various cooperative societies, including those linked to entities already under Sebi's scanner.
Sources said certain entities are taking the cooperative society route to garner funds from public investors after being barred by Sebi for running illegal schemes collecting money through various bonds and other securities.
While Sebi has informed the investors concerned that such schemes are not under its jurisdiction, their modus operandi is still being investigated as it has the powers to crack down on all illegal collective investment schemes worth Rs 100 crore or more.
In its public notice, Sebi said that ‘investors are cautioned not to invest in any schemes/arrangements which are unregulated. Sebi does not guarantee the repayment of money by these companies/entities.’
Sinha also said that a greater oversight mechanism on insider trading and a stronger risk management framework were among key focus areas for Sebi in 2014.
He added that Sebi is also planning to bring in new categories of persons including public servants, regulatory officials, judiciary and government officials dealing with unpublished price-sensitive information under the ambit of the rules related to insider trading.
Further, Sebi chairman noted that the new norms ‘would also seek to clearly differentiate between 'innocent mistakes' and genuine transactions of company executives from the unlawful and serious trading offences’.
PHD Chamber Capital Market Committee Chairman Prithvi Haldea said that the corporate systems and processes ‘need to be credible and transparent, so that the interests of the investors may be safeguarded in a manner that enables them to exercise their choice in an informed manner while making investment decisions’.
NSEL default scam: Police file 9,800-page chargesheet
Mumbai: The Mumbai Police on Monday filed a 9,800- page chargesheet against five accused arrested in connection with the National Spot Exchange Ltd (NSEL) scam, which involves a payment default of Rs 5,600 crore. The voluminous charge sheet included the list of attached properties of the arrested and wanted accused, frozen bank account details, information of physical stock available in the warehouses, statements of 297 witnesses, said Joint Police Commissioner (Crime) Himanshu Roy.
The charge sheet, however did not mention the names of the wanted accused. ‘The probe in the case is not yet over. Some more charge sheets will follow in the later stage. One should not feel that we have given anybody a clean chit just because their names did not appear in the first charge sheet,’ Roy said.
‘Jignesh Shah (Promoter and director of the NSEL) is an accused in the case and fully involved in the scam and his name is also there in the FIR,’ the IPS officer said responding to a query. The charge sheet has also thrown a light on the modus operandi of the crime, how management was hand-in-glove with the defaulters, how certain borrowing companies appointed dummy directors, manipulation of books by various companies, Roy added.
The FIR was lodged on 30 September by EOW against directors Jignesh Shah, Joseph Massey and others charging them with cheating, forgery, breach of trust and criminal conspiracy, among other offences.
The spot commodity bourse, promoted by Shah-led Financial Technologies (FTIL), has been facing problems in settling Rs 5,600 crore dues of 148 member brokers, representing 13,000 investor clients. Police suspect equal role of brokers in the scam as many of them have sold NSEL commodities despite having knowledge of the fraudulent practices in the spot exchange.
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