SEBI cautions investors against illegal fund raising

NEW DELHI: Concerned over a large number of companies indulging in illegal money pooling activities, markets regulator Sebi today cautioned investors and general public against dealing with such entities, the number of which stands at 335 as per the latest update.

The Securities and Exchange Board of India (Sebi) has cautioned investors against unlisted companies, issuing securities without complying with the market norms, and against firms running unregistered Collective Investment Schemes (CIS).

Updating the list, Sebi has so far made public of 100 entities indulging in CIS, and another 235 firms issuing securities without complying with the market norms, the capital market watchdog asked investors not to invest in their illegal fund mobilisation activities.

Sebi has asked investors to report such unauthorised money pooling activities to the market regulator, state authorities including police “immediately, along with appropriate details/ documents”.

In a statement, Sebi has cautioned investors not to invest in schemes offered by entities barred by it from raising money or entities not registered with the regulator.

Since January 2011, it has passed orders against 100 companies and their respective directors carrying on unregistered CIS.

Among the companies banned by Sebi from raising funds are Garima Homes & Farm Houses, Anmol India Agro Herbal Farming and Dairies Care Co, SPNJ Land Projects and Developers India, Garima Real Estate and Allied, Swar Agrotech India and Swar Agroteak and Housing India.

Sebi further said that Gift Collective Investment Management Company Ltd is the only company registered with it to undertake CIS activities.

In an another statement, Sebi has cautioned investors against unlisted companies issuing securities without complying with ‘Public Offer’ norms.

Before investing in securities, the regulator advised investors to see whether offering companies have filed offer document or application with stock exchanges for listing.

According to the norms, any offer of securities made to 50 or more persons has to be construed as a ‘Public Offer’.

Some unlisted companies are luring retail investors by issuing securities, including non-convertible and convertible debentures, non-convertible and convertible preference shares, equity shares in the garb of private placement without complying with requisite provisions of the law.

The regulator has taken several prohibitory action against these 235 firms. Among such firms are Cell Industries, Affiance Industries, Tribhuvan Agro projects, Mass Infra Realty, GBC Enterprise, Tribhuvan Agro projects, Phoenix Properties and Sankalp Projects.

Credits ET Realty

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