SAT upholds Sebi rulings against 3 entities on CIS schemes

SAT upholds Sebi rulings against 3 entities on CIS schemes Mumbai: As Sebi continues its crackdown on fraudulent collective investment schemes, the Securities Appellate Tribunal today upheld regulatory orders for refund of money by three entities, including Alchemist, that were into money pooling activities in the name of realty business.

The tribunal directed three entities -- Alchemist Infra Realty Ltd, Maitreya Services Pvt Ltd and NGHI Developers -- to refund huge amounts of money that were collected from thousands of investors through unauthorised schemes.

Alchemist Infra has been asked to give back funds worth Rs 1,000 crore to the investors within 18 months while Maitreya Services has to refund Rs 700 crore in six months. NGHI Developers too has to return money collected from the public in six months.

The Securities and Exchange Board of India (Sebi), which regulates Collective Investment Schemes (CIS), has been clamping down on illegal money raising activities.

Besides these three companies, Sebi has clamped down a number of other unauthorised CIS operations in recent months including those by Saradha, MPS, Rosevalley, Sumangal and Sai Prasad groups.

Alchemist Infra, which collected about Rs 1,000 crore from about 1.5 million investors, was asked by Sebi to refund money collected through unauthorised CIS businesses.

After hearing its appeals against Sebi order, SAT upheld the regulatory directions against the realty firm but gave the company 18 months time to refund money in view of the "long and tedious process of implementing the scheme of repayment" to such large number of investors. However, the company had sought 5 years for refund process.

After considering facts and circumstances of the case, the tribunal said, "a period of 18 months would duly suffice", with a rider that the company shall "submit a report to Sebi every six months giving accurate details regarding progress made while executing the scheme of repayment in question".

Besides, the tribunal said in case any eventuality arises in future, the company can seek further extension of time to implement Sebi's order.

Separately, the tribunal directed Maitreya Services and NGHI Developers to refund money collected from the public.

Sebi had found that both companies were running unauthorised CIS businesses.

In the case of Maitreya Services, Sebi, in March, had barred the company and its directors from the securities market till the time all its CIS were wound up. It had decided to initiate prosecution proceedings against them.

The market regulator had found that the company had launched and operated CIS without registering with it for the same and an amount of Rs 804 crore was outstanding with it to be repaid to investors.

In the matter of NGHI Developers, Sebi through an order in July 2012, had banned Jaipur-based firm from collecting money from investors and accessing the capital market.

The company was collecting funds from the public for developing plots of land through its plans.

PTI