SEBI busts phony investment syndicate; fears large-scale fraud
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SEBI busts phony investment syndicate; fears large-scale fraud

Last Updated: Tuesday, April 09, 2013, 22:16
 
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SEBI busts phony investment syndicate; fears large-scale fraud
Mumbai/New Delhi: Market regulator SEBI on Tuesday unearthed a phony investment syndicate in the national capital, wherein a large number of people could have been defrauded in the name of investments made by their deceased family members.

Acting on an individual complaint, SEBI probed a case of an investor getting phone calls for impressive returns on the mutual fund products purchased by his deceased son, provided some further investments were made by the person.

The preliminary investigation by SEBI, with the assistance of the Economic Offences Wing of Delhi Police, however showed that there was an organised attempt by several people to defraud the gullible investors.

"It is suspected that the number of victims of such fraudulent attempts could be much higher, which would be revealed in due course after further investigations by Delhi Police and SEBI," the regulator said in a late night statement.

While the matter is being probed further, SEBI said it managed to prevent today "an attempt to mis-sell an investment product to an investor in Delhi by a person claiming as agent of mutual funds".

The regulator also cautioned investors that they should verify the credentials of people approaching them as agents or employees of financial services companies before making any investment through such people.

The regulator had received a complaint from an investor that some unknown persons claiming to be 'agents' and 'brokers' of mutual funds and insurance companies have been contacting the complainant saying that the deceased son of the complainant had invested in mutual funds and they are maturing in a short while.

In order to get the full amount, the complainant was asked to mandatorily issue a cheque in advance for a new mutual fund scheme or insurance policy, failing which he will lose a substantial portion of the maturity amount as broker commission.

The agent told the complainant that his son had made investments in mutual funds which are about to mature and on maturity the complainant will get only Rs 5 lakh.

However, if the complainant made a further investment of Rs 2.5 lakh, the complainant will get maturity proceeds to the tune of Rs 12.5 lakh, the agent had claimed.

Subsequently, a preliminary probe was conducted by the Investigations Department of SEBI, where it was found that the phone numbers from which the 'agent' had called were in some others' name and the company was also different.

Sensing a clear attempt to defraud, cheat and misappropriate as well as mis-sell financial products, SEBI deputed an official to visit the complainant at the time of the visit of the 'agent'.

SEBI also took the assistance of the Economic Offences Wing of the Delhi Police in the case.

On perusal of the forms and after preliminary enquiries, it was found that there was an organised attempt by several people to defraud and mis-sell.

SEBI said that an FIR was being lodged with Delhi Police and it suspects that number of victims of such fraudulent attempts could be much higher.

PTI


First Published: Tuesday, April 09, 2013, 22:16


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