sebi:WTM/PS/146/IMD-CIS/FEB/2016
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Facts / Headnote
Directions issued: noticees restrained from collecting money and launching new schemes, directed to refund investors, submit winding up and repayment report, provide inventory of assets, with four-year market restraint and further consequences (criminal/civil references, winding up reference, attachment proceedings) in case of non-compliance.
Provisions invoked
- s. 11A
- s. 24
- s. 19
- s. 12
- s. 58A
Regulations
- Reg. 65
- Reg. 11
- Reg. 3
- Reg. 4(2)
- Reg. 4(2)(t)
Parties
- Sai Prasad Corporation Ltd
- Shri Balasaheb K. Bhapkar
- Shri Shashank B. Bhapkar
- Mrs. Vandana B. Bhapkar
Holding
The noticees were found to have launched and run a collective investment scheme without obtaining a certificate of registration from SEBI, in violation of Section 12(1B) of the SEBI Act and Regulation 3 of the CIS Regulations, and their fund mobilisation was found to be a fraudulent practice under Regulation 4(2)(t) of the PFUTP Regulations.
Full text
Page 2 of 28 1.3 On enquiry, SEBI, prima facie found that SPCL is engaged in fund mobilizing activities from the public, which is in the nature of a Collective Investment Scheme without obtaining a certificate of registration from SEBI. Therefore, SEBI, vide an interim ex- parte Order dated July 22, 2014 (hereinafter referred to as ‘interim order’) issued certain
Page 3 of 28 Participation Subscription Yearly Income Structure ‘JC’ for 6 Yrs: Total Participation (Rs.) Net Payable on Every Year Expected Sum of Participation on JV Completion (Rs.) Financial Assistance in case of accidental Death (Rs.) 3,000 60 5,000 7,500 6,000 120 10,000 15,000 9,000 180 15,000 22,500 12,000 240 20,000 30,000 15,000 300 25,000 37,500 1,02,000 18,870 1,02,000 1,53,000
Page 4 of 28 2.8 SPCL, for the purpose of soliciting funds from the public, opened a number of "Associate Service Centers" spread across 19 States of the country including the states of Maharashtra, Gujarat, Orissa, Tamil Nadu, Rajasthan, Karnataka, Jharkand, Chattisgarh, Madhya Pradesh etc. SPCL is also providing financial assistance in case of accidental death to “participants”. 2.9 In view of the above attributes of the scheme, it was alleged that the contributions were collected from the investors under the Schemes launched by the Company and the same is pooled and utilized in JPVSS under the pretext for the development of its land. The investments were made by the investors with a view to receive returns from the schemes. The property, contribution or investment forming part of the Schemes/Plans were managed by SPCL on behalf of investors and the investors did not have any day-to-day control over the management of the schemes. As stipulated under section 11AA of the Securities and Exchange Board of India Act, 1992 for collective investment schemes, SPCL is required to get a certificate of registration from SEBI under Section 12(1B) of the SEBI Act and Regulation 3 of the SEBI (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as ‘the CIS Regulations’). However, no registration was sought by the noticees from SEBI. 2.10 The mobilization of funds from the public, was also prima facie found to be a fraudulent practice in terms of Regulation 4(2)(t) o
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Source: SecMarx — sebi:WTM/PS/146/IMD-CIS/FEB/2016. 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.