24.4.13

Sebi orders Saradha to wind up



As the Mamata Banerjee government quibbles over legislations, capital market regulator Sebi has come out with an order asking the state government and local police to register both civil and criminal cases against Saradha Realty and its directors.
Issued late on Tuesday, the Sebi order also instructs Saradha Realty India Ltd to wind up its existing collective investment schemes (CIS) and refund the money collected by it within a period of three months from the date of this order and submit a winding-up and repayment report to the regulator in accordance with the CIS regulations. “Failing which, Sebi would initiate prosecution proceedings under Section 24 and adjudication proceedings under Chapter VI of the Securities and Exchange Board of India Act, 1992, against M/s Saradha Realty India Ltd and its directors,” the order says.
Sebi has also barred Saradha chief Sudipta Sen from accessing the capital market and restrained him from buying and selling stocks.
A reference of the order will also be made to the state government and police to register civil and criminal cases against Saradha Realty and its directors and managers — persons in charge of the business of its scheme(s) — for apparent offences of fraud, cheating, criminal breach of trust and misappropriation of public funds.



The capital market regulator, which functions under the Union finance ministry, will also ask the ministry of corporate affairs to initiate the process of winding up of Saradha Realty.
Sebi had first issued a notice to Saradha Group on June 3, 2010 followed by four subsequent notices in July, August, October and November advising it to furnish documents related to mobilization of funds. After receiving the explanations, Sebi had issued a show-cause notice to the group on December 15, 2011. There was a hearing at the Sebi Kolkata office on May 15, 2012, but the regulator was not convinced with its explanation. Subsequently in September 2012, Saradha Group had filed some documents to Sebi but the regulator observed that the group was not submitting relevant information. The last hearing was slotted for April 2, 2013 but nobody from the group appeared for that.
The market regulator observed that the company had mostly mobilized money showing land parcel. “The Saradha investors do not have any day-to-day control over the scheme and the property and not many of the investors have opted for allotment of land, rather more investors have opted for the pre-determined returns as promised by it.”


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