SEBI relies on Sahara order to nail Stock Guru fraudsters

A SEBI probe into the case found that the fraudsters had tricked the investors into putting in their money with a promise of 18% dividend, although the real assured dividend was a minuscule 0.12%

New Delhi: Referring to Supreme Court’s order against the Sahara group as a benchmark for cases of unauthorised raising of money from public, the Securities and Exchange Board of India (SEBI) has barred seven persons and one company from the markets for ten years for their involvement in the estimated Rs 1,500 crore “Stock Guru” fraud, reports PTI.


Besides, these entities would also have to refund the entire amount collected fraudulently from gullible investors, along with an interest of 15% per annum, SEBI said in an order after investigating the case.


The order follows a SEBI probe into complaints received by it regarding one Lokeshwar Dev and his accomplice Priyanka Dev, both of whom used several aliases, fraudulently raising more than Rs1,500 crore through sale of preference shares of a company named SGI Research & Analysis.


Names used by them included Ulhas Prabhakar Khaire and Raksha J Urs, Siddharth Jay and Maya Siddharth Marathe, Dr Raj and Priya Zaveri, Dr Rakesh Kumar and Prachi Maheshwari.


A SEBI probe into the case found that the fraudsters had tricked the investors into putting in their money with a promise of 18% dividend, although the real assured dividend was a minuscule 0.12%.


Besides, the money might have mostly been collected in cash to avoid any regulatory glare, as SGI’s bank account had entries for a total amount of just about Rs44 lakh towards subscription of its shares by 162 persons.


However, this was enough for SEBI to enforce the norms that make any offer for subscription of shares or debentures to 50 or more persons a public issue, thus making it mandatory to seek SEBI’s approval for any such offer.


Passing the order, SEBI’s whole-time member Rajeev Agarwal said that the Supreme Court order of 31 August 2012 in Sahara case has “held that an offer to fifty or more persons becomes public issue” by virtue of the relevant provisions of the Companies Act and needs compulsory listing.


Two Sahara group companies were asked by the Supreme Court to refund the money collected from investors through certain convertible debentures, after the firms approached the apex court against a SEBI order in this regard.


“In the present (Stock Guru) case, convertible preference shares were offered and issued to more than 49 persons” and therefore it qualifies as a public offer, he said, adding that SGI offered “specified securities” to public but did not comply with the applicable SEBI Regulations and Companies Act.


Agarwal further noted that it is a settled position, in view of the Supreme Court order in Sahara case, that the power to administer proceedings in cases of public issue of shares or debentures lies with SEBI.


SEBI’s investigations found that SGI had invited investors to subscribe to its convertible preference shares through its office in Delhi, its agents and representatives, associate concern “stockguru.india” and its website.


SEBI said that “these securities were of face value Rs10 each and were offered and subscribed at an exorbitant premium of Rs1,500 per share”. However, the promised dividend of 18% was found to be on face value of Rs10 and not on exact per share price of Rs1,510.


“In other words, subscribers were promised dividend of Rs1.80 on investment of Rs1,510 (which translates into 0.119% real dividend). Further, there was no reference of redemption premium to be paid to the subscribers,” SEBI said.


“There was no economic justification of payment of so high premium with minuscule dividend...” it added.


SGI did not issue any share certificate to subscribers even on payment of money and made various “misrepresentations and false statements containing misleading and distorted information that the said convertible preference shares shall soon get listed after SEBI approval and the listing price would be around Rs2,000 per share”.


SGI was incorporated on 10 June 2010, while the issue of its convertible preference shares opened for subscription in October 2010 and continued till January 2011.


The investigations revealed that Stockguru.india and its partners had also floated “multi level marketing” or ‘Ponzi’ schemes and raised money from public through dubious schemes in different part of the country using different names.


The Economic Offences Wing, New Delhi has arrested them and they are investigating the frauds committed by them.


The entities used for the fraud included SGI Securities, G3 Commodities, SGI Beverages, SGI Buildtech, Coppertrenzs, DP Securities, DP Currencies, DP Commodities, DP Gems and Diamonds, DP Jewels, DP Enterprises and Stockguru India.


SEBI said that SGI and its promoters “made false and untrue, promises, declarations/statements containing misleading and distorted information with intention to lure innocent and gullible investors” and raise money from public in a fraudulent manner.


SEBI had issued show-cause notices in May 2012 to SGI, Lokeshwar Dev, Priyanka Saraswat Dev, Pradeep Sharma, Baldev Raj Sharma, Ramesh Sharma, Sanjeev Sharma and Sonia Sharma.


Pradeep Sharma contended before SEBI that he has “90% physical disability” and was threatened by Lokeshwar Dev to become a director he was himself cheated by him.


However, he could not provide any evidence, SEBI said.


Baldev Raj, Ramesh, Sanjeev and Sonia Sharma claimed that they were not the directors, but initial subscribers in the SGI and they had subscribed to only 10 shares each. However, SEBI found them to be instrumental in incorporation of SGI and “formulation of the plan of fraudulent public issue of SGI”.


“As regards the contraventions found in the present case for which SEBI is concerned, it is necessary to lift the corporate veil of SGI to reach out to all the persons involved and instrumental in the formulation of device and contrivance and making them answerable for the acts committed in furtherance of common design,” SEBI said.



Vinay Joshi

4 years ago

Hello Ms.Sucheta,

What SEBI has done with SAHARA? [apex court upheld it – SEBI in it’s lifetime can never unearth Sahara] & talking about the SGI – SEBI whole time Director Order banning & refunding 1.5KCr @ 15% int is a far cry! SGI investors SHOULD suffer rightly & can forget making a fast buck!

Ketan Parikh is banned!? Is he a saint, sitting in London chanting mantras?

Let’s see what SEBI talks on RIL 18th, hearing!

These are not the points to be raised by me.

I’m vociferously coming out on SEBI mulling new routes to raise public holding in listed cos.

What avenues are they trying to create? Preferential allotment & QIP’s!!!??
In this manner promoters holding can be offloaded?

U.K Sinha confirmed on the sidelines of his lecture, a damn squib.
Let’s await the review of takeover norms as he states.

Last year OFS ok but IPP was essentially for PSU’s divestment & subsequent holding.
Then it was rights & bonus ok.

Today’s market euphoria is not for long. Already on correction path. Pre-Budget sentiment can lift it followed by correction.

In which manner about a dozen PSU’s will offload to meet 10% norm by August?
Even non PSU’s to meet 25% by June.

Anything between 25-30KCR is required to be offloaded.
Is there liquidity? Can bourses be on high pitch?
Global cues will be weak in the coming months.

Will SEBI not defer the deadline? Will it bring down upfront margins?

If SEBI has teeth then we can talk about Sahara/SGI.

It should prove 18th, RIL!




In Reply to Vinay Joshi 4 years ago

Thanks for the provocative piece and the comment. Yes, SEBI is as inefficient as any other regulatory authority. Moreover, what is needed is to trace out forst the destination of the looted money so as to help the cheated people get back their investments along with the interest thereon. SEBI has no expertise to do this job and, with the corrupt IRS officer in the CBI net (and his bosses awaiting the same fate, one hopes!), one wonders who will do this job. One thing is clear though. In India, corruption and cheating are the most profitable ventures1

Govt raises cap on supply of subsidised LPG cylinders to 9

Oil companies have been permitted to raise diesel prices by a small quantum periodically till such time that they are able to cover Rs9.60 per litre loss they incur on the fuel, oil minister Veerappa Moily said


New Delhi: The government of India on Thursday raised the cap on supply of subsidised liquefied petroleum gas (LPG) cylinders to nine bottles from six per year and allowed oil companies to hike diesel prices by a “small quantum” periodically, reports PTI.

There will be no change in LPG and kerosene rates, oil minister M Veerappa Moily told reporters here after the meeting on Cabinet Committee on Political Affairs (CCPA).


“I am happy to inform the Cabinet Committee on Political Affairs has decided to raise the cap on subsidised LPG to nine cylinders per household in a year from existing six cylinders,” he said.


Consumers will get a quota of five subsidised cylinders between September 2012 and March 2013 and from a April 2013, they will be entitled to nine cylinders per annum.


Moily said that the oil companies have been permitted to raise diesel prices by a small quantum periodically till such time that they are able to cover Rs9.60 per litre loss they incur on the fuel.


Refusing to provide details of diesel price increase, Moily said the raise may take place as early as Thursday night.




4 years ago

The raising of ceiling on subsidised gas cylinders is a step in the right direction. Last week, FM had told media that 'Congress-ruled states are giving 9 cylinders at subsidised rates and Non-Congress ruled states should follow suit.' A decision by Centre to make the ceiling uniform gives an impression that government will do sensible things, if persuaded with right strokes.

Govt cuts reserve price of CDMA spectrum by 50%

Reduction in the reserve price of CDMA spectrum may help companies like Sistema of Russia to bid in the auction and make up for the ones they lost when the Supreme Court cancelled 122 licences in February last year


New Delhi: The government of India on Thursday approved a 50% reduction in the reserve price of spectrum used by Code Division Multiple Access (CDMA) mobile operators, reports PTI.


“The Cabinet has approved 50% reduction in CDMA spectrum (reserve) price which was fixed earlier at Rs18,200 crore (pan India 5MHz),” telecom minister Kapil Sibal said.


All the spectrum auction, Global System for Mobile (GSM) and CDMA, will be completed by 31st March and markets will decide how much revenue the government will get, he added.


After 50% reduction, pan-India 5MHz of 800 MHz spectrum (CDMA radio-waves) will now cost Rs9,100 crore.


The Cabinet, headed by prime minister Manmohan Singh, considered the recommendation of the Empowered Group of Ministers (EGoM) which suggested a 50% cut in the reserve price of 800 MHz band.


The November auction of CDMA spectrum did not attract bidders due to high reserve price. The reserve price set was 11 times higher than what operators paid in 2008.


The government had earlier fixed CDMA spectrum price at 1.3 times more than the GSM spectrum in 1800 Mhz band.


The Cabinet has already approved a 30% cut in the reserve price of 1,800 MHz band spectrum used for offering GSM services.


Reduction in reserve price of CDMA spectrum may help companies like Sistema of Russia to bid in the auction and make up for the ones they lost when the Supreme Court cancelled 122 licences in February last year.


The apex court has recently allowed the companies whose licences were cancelled to continue operations till 4th February when the government is supposed to inform it of the final reserve or minimum price for the spectrum sale.


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