sebi:WTM/GM/EFD/40/2017-18
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Facts / Headnote
Directions issued: PAIL and its directors restrained from collecting contributions or launching CIS, directed to wind up schemes and refund investors within three months, restrained from accessing securities market, and noticee directors barred from holding director/KMP positions in listed companies for 4 years.
Provisions invoked
- s. 11A
- s. 12
Regulations
- Reg. 65
- Reg. 3
- Reg. 4(2)(t)
Parties
- PAIL
- Mr. Santosh Shrawan Mali
- Mr. Santosh Kaluram Paygude
- Mr. Vanshree Tukaram Chidrawar
- Mr. Hrishikesh Vasant Kanase
- Mr. Dattatray Madhav Yadav
Holding
The schemes of 'Rearing of Calves/Goats/Buffaloes' offered by PAIL constitute a 'collective investment scheme' under Section 11AA of the SEBI Act and were required to be registered under Section 12(1B) of the SEBI Act and the CIS Regulations. PAIL's fund mobilization without registration was illegal and amounts to a fraudulent practice under Regulation 4(2)(t) of the PFUTP Regulations.
Full text
Page 2 of 10 Schemes) Regulations, 1999 (CIS Regulations). It was also observed that the fund mobilization activity of PAIL through its various schemes prima facie amounted to fraudulent practice under regulation 4(2)(t) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practice Relating to Securities Market) Regulations, 2003 (PFUTP Regulations), which was brought into effect from September 06, 2013.
Page 3 of 10 in the SEBI letter dated December 19, 2016. In the meantime, as the desired information and reply was not received, another reminder letter dated December 9, 2016 was sent to the company advising it to furnish information and reply to the interim-order cum show cause notice. However, neither the company nor the directors filed their reply. In order to proceed further with the matter, an opportunity of hearing was granted to the entity on March 2, 2017. PAIL requested for an adjournment of the hearing and further time to file its reply. Considering the request, the hearing was rescheduled to March 31, 2017. On March 31, 2017, Mr. Dattatray Madhav Jadav and Mr. Santosh Shrawan Mali appeared for hearing and stated that they will file their written submissions and documents sought by SEBI within seven days. However, no documents or written submissions have been received. Thus, being convinced that the noticees were granted sufficient opportunity to present their case, I am proceeding with the matter on the basis of the material available on record.
Page 4 of 10 6. I have taken into consideration the observations in the interim order and the material available on record. The issue for determination is whether the mobilization of funds by PAIL under its various schemes/plans for 'rearing and breeding of livestock for service charges' falls under the ambit of ‘collective investment scheme’ in terms with section 11AA of the SEBI Act, 1992. Section 11AA, which provides for the conditions to determine whether a scheme or arrangement is a 'collective investment scheme', reads as under :
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Source: SecMarx — sebi:WTM/GM/EFD/40/2017-18. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.