SEBI warns investors against illegal schemes

After being barred by SEBI for running illegal schemes and collecting money through various bonds and other securities, certain entities are now taking the cooperative society route to garner funds from investors

Market regulator Securities and Exchange Board of India (SEBI) has cautioned investors and the general public against entities making false promises of exorbitant returns through schemes being run without regulatory approvals.


In a public notice, SEBI said it observed that some companies or entities are mobilising funds illegally from the public by making false promises of exorbitant rates of return under various schemes.


These companies are also indulged in issuing cumulative convertible preference shares (CCPS) and cumulative redeemable preference shares (CRPS) without necessary authorisation and regulatory approvals, it said.


Schemes made or offered by cooperative societies, deposits accepted by non-banking financial companies (NBFCs), by companies declared as Nidhi or a mutual benefit society under relevant sections of the Companies Act, or pension and insurance schemes framed under the Employees Provident Fund (EPF), or chit funds are outside the purview of SEBI’s jurisdiction, the regulator said, adding that their returns, therefore, cannot be guaranteed by it.


This warning comes in the wake of SEBI receiving complaints and communications from investors with regard to huge returns offered by various cooperative societies, including those linked to entities already under SEBI’s scanner.


According to sources certain entities are taking the cooperative society route to garner funds from public investors after being barred by the market regulator for running illegal schemes and collecting money through various bonds and other securities.


While SEBI has informed investors concerned that such schemes are not under its jurisdiction, their modus operandi is still being investigated as it has the powers to crack down on all illegal collective investment schemes (CIS) worth Rs100 crore or more.


In its public notice, the market regulator said, “investors are cautioned not to invest in any schemes/ arrangements which are unregulated. SEBI does not guarantee the repayment of money by these companies/entities.”




3 years ago

when big companies like Reliance Life Insurance make product sales through its agents through misleading claims, what action does SEBI or for that matter, IRDA take ? The burden of proof is on the investors to prove that they have been cheated as phone records/calls are not admitted as evidence as was with my experience with India Infoline 5 years ago.


3 years ago

Are Gold purchase Schemes offered by jewelers legal?

Do such schemes come under the purview of SEBI?



In Reply to MOHAN 3 years ago

Vaibhav Dhoka

3 years ago

The last para reads
"In its public notice, the market regulator said, “investors are cautioned not to invest in any schemes/ arrangements which are unregulated. SEBI does not guarantee the repayment of money by these companies/entities.”
Does this mean SEBI guarantees return of interest and principal in schemes regulated by it?
This is not TRUE at all.SEBI should give its version of of above statement.

December car sales better than expected

According to Nomura, demand has slowed down quite substantially post a relatively strong festival season, however, margins for automakers would hold on due to recent price hikes

December auto sales were below expectations, especially for commercial vehicles (CVs), while the decline in car sales was somewhat arrested by Maruti Suzuki India Ltd. "As per our discussion with the companies and dealers, demand has slowed down quite substantially post a relatively strong festival season. However, margins would hold on due to recent price increase," said Nomura in a research report.


According to the report, car industry volumes declined by 5% in December marginally above Nomura's expectations of a 7-8% decline led by strong performance from Maruti Suzuki. The report said, "Maruti Suzuki's domestic volumes increased by about 6% while we were expecting a 4% decline. Strong growth in low-end petrol segment and D’zire led to the positive surprise, we believe. Maruti Suzuki's market share was around 55% in December 2013 – the highest in the past four years. This is quite positive especially considering increased competitive intensity from global original equipment manufacturers (OEMs)," Nomura added.


During December for other unlisted companies, Hyundai’s volumes were up 6%, while Honda’s volumes increased by about 30%, led by its Amaze variant. Other global OEMs like GM and Ford saw double-digit volume decline despite new launches.


Nomura said during the month, volumes in the medium and heavy CVs declined by about 25% as against its expectations of 20% decline. Volumes for Tata Motors declined by 22% while Ashok Leyland saw 26% decline in MHCV volumes and Eicher’s CV volumes fell by 34%, the report said.


Volumes in two wheeler increased marginally by 2%, led by Honda Motorcycle and Scooter India Pvt Ltd (HMSI). HMSI reported another strong set of numbers (up 36%) as its scooter volumes increased by 54% while bike volumes increased by 18%. During December Hero MotoCorp’s volumes declined by about 3% while Bajaj Auto had a weak month with domestic motorcycle volumes down around 30%. TVS’ volumes were flattish while Yamaha saw a strong 58% growth partly due to the lower base effect.


"Within our coverage, only Maruti Suzuki reported stronger-than-expected volumes. If the current trend continues, we see downside risks to our FY14F volume estimates for Bajaj Auto and CV OEMs – Ashok Leyland and Tata Motors. There could be some upside risks to our volumes estimates for Hero MotoCorp," Nomura said.



CAG can audit private telco’s accounts says Delhi High Court

While rejected petitions filed by AUSPI and COAI, the High Court permitted CAG to conduct audit of private telecom companies under the TRAI Act

The Delhi High Court on Monday held that the Comptroller and Auditor General of India (CAG) can audit accounts of private telecom operators under the relevant provisions of the law.


A Bench of Justices Pradeep Nandrajog and V Kameswar Rao permitted the top accounting body to conduct audit of private telecom companies under the Telecom Regulatory Authority of India (TRAI) Act.


The HC rejected separate petitions filed by Association of Unified Telecom Service Providers (AUSPI) and Cellular Operators Association of India (COAI) against the decision of Telecom tribunal TDSAT on the issue in 2010.


The high court had reserved its order in November 2013 after conducting marathon hearings on the issue where it took on record submissions of the Centre, CAG and the petitioners — COAI and AUSPI.


Both the associations had argued, in essence, that CAG can’t audit private companies.


To achieve the purpose of audit, the operators had pointed out that they have already put in place mechanism of special audit as envisaged in the licence agreement between department of telecom and the companies.


The firms had claimed they maintain accounts in line with the TRAI rules and can’t be forced to furnish financials to CAG.


The CAG had vigorously staked its claim to audit the accounts and sought revenue sharing details from the telecom companies.



Gopalakrishnan T V

3 years ago

This is a welcome move and if seriously pursued more Scams will get revealed by auditing Telecom Companies.These Companies take the masses for a ride. They have millions and millions of Customers and and by fraudulent methods, if they hike the bills even by a rupee a month or enhance the bills through some messages uncalled for and unintended by the customer (which they are indulged in) these companies can make billions of rupees. Many a drop will make an ocean is the policy pursued by these companies and if the audit is serious and not an eye wash, many scams will be revealed. Last five years there is no semblance of administration in this country is a well known fact and loot has been the order every where. This is one of the reasons for Inflation and it cannot be contained by any economic policy measures.

MG Warrier

3 years ago

Article 149 of the Constitution mentions inter alia that “ The CAG shall perform such duties and exercise such powers in relation to the accounts of the Union and of the States and of any other authority or body as may be prescribed by or under any law made by Parliament…”. Perhaps those who drafted Indian Constitution might not have foreseen the kind of scrutiny now being necessitated by vanishing accountability on the part of ‘public servants’ who handle public funds. If the cardinal principle of financial management that sources and uses of funds should be subject to prudent accounting when money is collected from public is still valid, contesting the right to audit by those vested with that responsibility doesn’t stand reason. What baffles common man is the resistance to transparency in accounting, whether it is gold or money or any other assets. Government should make it clear that ‘public funds’ whether it be revenue receipts or funds mobilised by corporates or donations or offerings received by political parties or religious organisations, will have to be accounted in a transparent manner and will be subject to scrutiny by authorities mandated with such responsibility.
M G Warrier, Thiruvananthapuram

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