Thursday, February 12, 2015

Sebi cracks whip on Green Buds collective investment scheme

Cracking down on illicit money pooling that allegedly duped villagers and women in Karnataka of Rs 300 crore, Sebi has barred Green Buds Agro Farms, run by a husband-wife duo, and its directors from running such schemes and submit details of their assets and investors.
Sebi

The Securities and Exchange Board of India (Sebi) began a probe against Green Buds after it came across reports that the firm and its directors had collected Rs 300 crore from 6 lakh investors across Karnataka, mostly villagers and women.
  
As per Sebi's findings, the firm was inviting funds from public under an unauthorized 'collective investment scheme' with promised interest rates of 20-25 percent as returns.

In an order dated May 16, Sebi said that as no prior registration has been obtained by Green Buds for running the collective investment scheme it was "illegally mobilizing funds from the public, which prima facie amounts to a fraudulent practice".

Accordingly, Sebi has directed the Green Buds and its directors -- Bettahalli Ravindranath Lakshmegowda, Jayanthi Subbarayappa, and another associate Aruna Prasad -- "not to collect any money from investors from its existing scheme or to launch any new schemes".
   
Besides, Green Buds and its directors have been asked to immediately submit the full inventory of the assets owned by the firm out of the amounts collected from the "unit holders/investors under its existing schemes".

The entities have also been directed not to dispose of any of the properties or alienate the assets of the existing schemes as well as not to divert any funds raised from public.

Further, Green Buds and its directors have to within 15 days submit information sought by Sebi with regard to its schemes, list and details of investors, among others.

Following media reports, Sebi as a part of a preliminary enquiry into the alleged fraud had gathered information from the website of the company as well as from the website of Ministry of Corporate Affairs.
   
Sebi had also received a complaint from Greenbuds Workers and Depositor’s Protection Committee in March, this year, alleging the company of raising funds mainly from villagers and women offering high rates of interest as returns.
   
It was also alleged that the directors of the company have diverted the funds mobilized from investors and have amassed properties in their own names and in benami names.

The company's scheme pertained to purchase of land from the public funds for developing forestry/agriculture/industry and the profits were to be distributed to the investors.

SEBI bars three firms from mobilising public money

Continuing with strict action against entities raising public money illegally, Sebi has restrained Federal Agro Commercials, Kolkata Aryan Food Industries and Waris Agrotech from mobilising funds from investors.
SEBI

Besides, the Securities and Exchange Board of India has barred these three companies and their directors from accessing the securities market.
   
The market regulator found that the companies had garnered capital from several investors through issuance of redeemable preference shares (RPS) and had "prima facie" violated various norms.

SEBI observed that issues by these three firms were made to more than 50 people. Under the rules, that made them public issues of debt securities requiring compulsory listing on a recognised stock exchange. They were also required to file their prospectus, which they failed to do.
   
The regulator, in three separate orders, said that Federal Agro Commercials Ltd (FACL, Kolkata Aryan Food Industries Ltd (KAFIL) and Waris Agrotech (India) Ltd (WAL) are prima facie engaged in fund mobilising activity from the public, through the offer of redeemable preference shares and
as a result of such activities has violated the provisions of the Companies Act.
   
Accordingly, Sebi has asked FACL, KAFIL and WAL "not to mobilise funds from investors through the offer of RPS or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly, till further directions".
   
Further, the companies and their directors are barred from issuing any offer document or advertisement for soliciting money from the public for the issue of securities.
   
These firms and their respective directors are restrained from accessing the securities market. SEBI has also asked the entities not to dispose any of the properties or assets acquired by that company through the issue of redeemable preference shares, without prior permission from the regulator as well as not to divert the funds raised from public.
   
While asking FACL, KAFIL and WAL to provide a full inventory of all its assets and properties, SEBI has also asked these companies to within 21 days from the date of receipt of the order submit all relevant and necessary particulars sought by the watchdog.
   
The directions shall take "effect immediately and shall be in force until further orders," SEBI said in its Monday's order.

According to SEBI, FACL raised Rs 25.94 lakh from 310 investors, KAFIL mopped-up Rs 49.64 lakh via 115 persons and WAL allotted redeemable preference shares to 475 individuals and mobilised funds amounting to about Rs 36 lakh.

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