Despite the dubious modus operandi it followed, the company has escaped the regulators’ net
Stockguru.India, (SGI) a fraud company operating as a self-styled investment adviser, has allegedly duped its investors of around Rs1,000 crore. According to these investors, the company's managing director is absconding.
In December 2010, Moneylife had reported about the dubious modus operandi of Stockguru.India and advised investors to stay away from investing in the company. (This MLM openly flouts SEBI norms and offers 120% returns in a year through stock market investment!)
Going by the comments posted on consumer complaint forums, as many as 2 lakh investors have been duped of a whopping Rs1,000 crore.
One comment reads: "It's really the height of deception. Lokeshwar Dev made a lot of promises and played with more than 2 lakh families. I (had) also invested hard-earned money and even advised many of my friends … as I found it to be a very lucrative plan. As per Lokeshwar's comment, he has run away to the US and will not return until he would be out of IT department boundaries and (it will) take several years. His web site, contact numbers, top leaders contacts are out of reach, hence there is nobody to help us."
Another comment says, "Stockguru.India was a pre-planned fraud by Lokeshwar Dev Jain. In February, he had to return 100% principal amount taken by his company six months back, so he himself complained to Income-Tax authorities about surplus cash in his office. Only a handful amount of money was seized, as Lokeshwar must have withdrawn the entire amount from the company's account, which is estimated at over Rs1,000 crore, before the raid which he was expecting. He kept making a fool of everyone for the next two months, so he could escape to the US along with his family."
SGI is a multi-level marketing (MLM) company that promised 20% returns per month. The company describes itself as the country's 'Premier Financial Consultancy', offering trading solutions in equity, derivatives, currency futures, commodities trading, initial public offerings (IPOs), insurance (life/non-life), general insurance, mutual funds, portfolio management services and terminal handling, all under one roof.
The MLM company's investment plan was very simple. You pay a minimum Rs10,000 as investment and Rs1,000 as registration fees. There is no limit on the maximum amount one can invest. It offers a return of 20% per month for up to six months and the principal amount invested is returned in the next six months. It also gives post-dated cheques of the principal and a promissory note as security. In short, on an investment of Rs11,000, the company offers to pay Rs12,000 in six months and the rest Rs10,000 over the next six months, that is a total of Rs22,000 or a 120% return in a year.
Such huge returns were suspicious, given the volatility in the market, but it did manage to attract a lot of investors.
SGI is not registered with the Securities and Exchange Board of India (SEBI) as an investment adviser, but still offers to trade on behalf of clients. It also operated without any trading licence from the Reserve Bank of India and SEBI. So, will the regulators take any action against the officials of the company?
Moneylife had raised this matter earlier, but it seems that the regulators ignored the issue. Hope this time around the regulators, who keep on harping that 'they care of retail investors', will punish the fraudsters and save the investors.
Moneylife Foundation, an affiliate of Moneylife, that is a not-for-profit organisation promoting financial literacy, has always advised people not to invest in MLM companies, which are not registered with SEBI or RBI. However, people continue to fall in the trap since they promise high returns.
Describing corruption a scourge that confronts all of us, prime minister Manmohan Singh said, "The fact that the civil society and the government have joined hands to evolve a consensus to move this historic legislation augurs well for our democracy"
New Delhi: Terming the joining of hands of civil society and government on the Lokpal Bill issue as a step that augurs well for democracy, prime minister Manmohan Singh said the government intends to introduce the "historic legislation" in the Monsoon session of Parliament, reports PTI.
"I am happy that the government and representatives of civil society have reached an agreement in our mutual resolve to combat corruption. I am pleased that Anna Hazare has agreed to give up his fast," he said in a statement here.
Describing corruption a scourge that confronts all of us, the prime minister said, "The fact that the civil society and the government have joined hands to evolve a consensus to move this historic legislation augurs well for our democracy."
He said the interaction between the government and the representatives of Mr Hazare was productive.
"I hope that process to prepare this legislation will move forward in a constructive mode so that after consultation with a wide spectrum of stake holders, this legislation is placed before the Cabinet for introduction during the Monsoon session," the prime minister said.
The government had last night agreed to issue a formal order to set up a 10-member joint committee for drafting a strong Lokpal Bill.
The announcement of an agreement came from both sides after four days of Mr Hazare's fast-unto-death that evoked a nationwide support cutting across the society.
Finance minister Pranab Mukherjee will be the chairman of the committee that will also include law minister Veerappa Moily, telecom minister Sibal, home minister P Chidambaram and water resources minister Salman Khurshid as members.
Besides Mr Hazare, those representing the civil society in the joint committee will be eminent lawyers Shanti Bhushan, Prasant Bhushan, retired Supreme Court judge Santosh Hegde and RTI activist Arvind Kejriwal. Shanti Bhushan will be the co-chairman.
FII inflows are slowing down and the recent rally is losing steam
After a strong rally last month, which was preceded by a subdued performance in January and February, the market was almost at a standstill in the week ended 8th April in the absence of any domestic triggers. The market registered gains on the first trading day of the week, but subsequently turned south and declined sharply on Friday.
Overall, the Sensex advanced 31 points (0.16%) to end the week at 19,451, and the Nifty rose 16 points (0.27%) to 5,842.
Among the Sensex stocks, BHEL, Hero Honda (up 4% each), Mahindra & Mahindra, State Bank of India and Bharti Airtel (up 2% each) were the top gainers and DLF (down 4%), Bajaj Auto, NTPC, Hindustan Unilever (down 3% each) and Reliance Infrastructure (down 2%) were the major losers.
In the sectoral space, BSE Capital Goods and BSE Realty gained 3% each, while the BSE Auto ended flat and BSE Oil & Gas declined 1% in the week.
The market rallied 9% in March on strong foreign institutional investor (FII) inflows, but the flows slowed down this week. FII investments, which were strong till Tuesday, fell in the latter part of the week.
With fundamentals unchanged and foreign institutional investor interest shifting to other markets, a slowdown is on the cards. While the gains accrued last month could erode slowly, weak Q4 earnings may also push the market back, even as policymakers keep an eye on high crude prices and cost pressures.
On the economic front, food inflation fell to 9.18% for the week ended 26th March, the lowest level in almost four months, on the back of a decline in the prices of pulses. The quantum of the rise in food prices stood at 9.50% in the previous week. Headline inflation figures for March 2011 will be released in the week ahead. The figure for February was at 8.31%. But with food inflation showing signs of easing, the pressure on the government seems to have reduced.
Betting high on the Indian market, foreign institutional investors (FIIs) purchased stocks and bonds worth Rs10 lakh crore in the fiscal year ended 31 March 2011. FIIs purchased stocks and debt securities worth Rs9,92,595.15 crore in fiscal 2010-11, while at the same time they sold shares and bonds worth Rs84,6157.71 crore-still leaving behind an investment of over Rs1.46 lakh crore for the fiscal. In dollar terms, foreign funds invested $32.22 billion.
State-owned oil firms-Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation-will lose a whopping Rs174,000 crore on selling fuel at government-controlled rates in 2011-12, 68% more than what they lost when crude oil touched an all-time high in 2008-09. The revenue loss, what oil firms call under-recoveries, will be the highest-ever, even more than what they lost in 2008-09 when crude oil touched an all-time high of $147 per barrel.
On the global front, the European Central Bank (ECB) raised its main policy rate on 7th April by 25 basis points, its first rate hike since July 2008. While the ECB is likely to continue with its rate hikes, it refrained from giving a time-frame for the next move.
The ECB's move follows the announcement that Portugal would seek financial assistance from the European Commission. The size of the request has not yet been announced, but it is likely to be in the range of the €85 billion bailout package that Ireland received last year.
The People's Bank of China, the country's central bank, on 5th April raised the benchmark one-year borrowing and lending interest rates by 25 basis points. This was the second time that China's central bank raised the benchmark interest rates this year and the fourth such increase since last year.
Following the hikes, the one-year deposit interest rate has gone up to 3.25%, while that for one-year loans has been pegged at 6.31%. Analysts said the move indicated that the central bank was making increased efforts to ease consumer price increases.