Clamping down on a bizarre scheme, promising returns of up to 100 per cent through investments in purchase of potatoes, the Securities and Exchange Board of India (SEBI), on Wednesday, asked the operator of this scheme not to raise any further money from the public.

SEBI also asked the West Bengal-based company, Sumangal Industries, to reply within 15 days to its prima facie observations in the matter, and barred the firm from diverting or alienating any assets of funds till further orders.

“Sumangal Industries has to be prevented from carrying on further with its activity related to the collective investment scheme without obtaining due registration from SEBI in accordance with law,” the regulator said in an order.

The company has been directed not to launch any other collective investment scheme without SEBI’s approval.

SEBI began investigating the matter after it came across a newspaper advertisement in Kolkata by Sumangal Industries, wherein it was soliciting funds from the public with promise of returns of 20-100 per cent, among other things, under a ‘Flexi Potato Purchase Scheme’

Thereafter in October, 2012, the market regulator informed the company that no entity could carry on or sponsor or launch a collective investment scheme without obtaining a certificate from it.

It also said the company would have to submit certain documents to obtain the certificate.

However, the company in its reply to SEBI said it was trading in potatoes for which it had a trading licence and it was dealing in agricultural and non-agricultural products within and outside India.

It also denied that it was running a collective investment scheme and submitted that the question of obtaining a certificate of registration from SEBI did not arise.

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