Sebi cracks down on firms raising public funds illegally

Aug 05 2014, 01:39 IST
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SummaryMarket regulator Sebi is coming down hard on entities raising public money illegally through issue of 'redeemable preference shares' and similar instruments, as also through sister concerns after being barred from markets.

Market regulator Sebi is coming down hard on entities raising public money illegally through issue of 'redeemable preference shares' and similar instruments, as also through sister concerns after being barred from markets.

Action has been initiated in a number of such cases in the past one month, wherein close to R5,000 crore had been raised through issuance of such securities.

These cases are other than those involving illicit collective investment schemes (CIS). Sebi has initiated action in many CIS cases and companies that raised close to R4,000 crore have been told to wind down their schemes.

In connection with violation of capital markets norms in issuance of RPS and other securities, at least seven companies, as also their promoters and directors, faced strict action by the market regulator in July itself.

These firms were found to have issued debentures and preference shares without complying with the necessary regulatory laws. Another eight companies faced Sebi crackdown last month for violation of CIS regulations and these include some companies based in Kolkata.

There are some sister concerns of companies that were earlier barred from raising funds as well as from launching investment schemes earlier, shows an analysis of recent orders passed by Sebi.

The regulator in one of its orders has now restrained Saiprasad Corporation from raising funds from the public through its schemes. The regulator had earlier last year barred two group companies, Saiprasad Foods and Saiprasad Properties, from raising funds from the public.

Similarly, Nicer Green Housing Infrastructure Developers was prohibited by Sebi on July 28 from raising further funds while it had issued restraining order against another group company Nicer Green Forest in March last year.

In one of its biggest crackdowns, Sebi has barred Pancard Club India which had raised more than R3,000 crore from nearly 25 lakh investors.

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