In a bid to project the affirmative action taken over the last few years and in recent days against “illegal raising of deposits” through collective investment schemes (CIS), the government on Saturday listed the proactive steps taken by various financial investigative agencies to convey the sense of seriousness with which such economic offences are viewed by the authorities.
A Finance Ministry statement on the issue has come in the wake of media reports in the past few days highlighting concerns regarding such “alleged” illegal raising of deposits, especially in rural and semi-urban areas, in Eastern India and duping of the gullible public.
“Promoters of such companies are allegedly siphoning the monies collected and are using a sales network comprising local persons who are offered hefty commissions, in a manner similar to Ponzi schemes,” the statement said.
In financial parlance, Ponzi schemes pertain to activities involving collection of money from a large number of gullible public investors who are lured by a promise of huge returns.
Listing the action taken in the specific case of Saradha Realty India Ltd., the statement said that SEBI passed an order on April 23 “directing them to wind-up their existing collective investment schemes and refund the money collected under the schemes with returns which are due to the investors as per the terms of offer, within a period of three months from the date of the order, failing which prosecution proceedings would be pursued”.
Detailing the steps put in place since last year to guard against such fraudulent investment practices, the statement said that SEBI initiated prosecution cases in CIS-related matters in various courts in over 59 cases in the eastern region.
As for the MCA, it has ordered inspection of the books of accounts and other records under the provisions of Sec.209A of the Companies Act, 1956, in respect of 31 companies. In some matters, investigation under Section 235 of the Act to be taken up by Serious Fraud Investigation Office (SFIO), has already been ordered.
In the case of 42 companies, Registrar of Companies, West Bengal, has issued notices under Section 234 of the Act calling for information and explanations, the statement said.