Consumer Interest   Exclusive
HSBC agrees to compensate Suchitra Krishnamoorthy
Under pressure from the regulators, HSBC has settled and closed its five year old dispute with singer-actress Suchitra Krishnamoorthy. While the settlement does not permit her to reveal the amount, we learn that this case of gross mis-selling and customer abuse has been amicably closed. Moneylife Foundation has been relentlessly pursuing this case for over two years
 

On World Consumer Rights Day, customers, who have been cheated by banks and their relationship managers and are willing to wage war for justice have something to cheer. Well known Singer-actor-author Suchitra Krishnamoorthi has reason to celebrate Friday after the Hong Kong and Shanghai Banking Corporation (HSBC) suddenly called her for a discussion and settled her case in less than 24 hours and handed over a cheque. Moneylife Foundation, which has relentlessly pursued this case with the Reserve Bank of India (RBI) knows that HSBC officials were summoned by the banking regulator, which had also made its displeasure clear. This was in addition to the show cause notice served to HSBC last year by the Securities & Exchange Board of India (SEBI), which covered the mis-selling and hefty churning of Ms Krishnamoorthi's portfolio causing a loss of just under Rs30 lakhs in fees and loads alone.


We understand that the amount that HSBC paid out may cover Ms Krishnamoorthi's entire loss, but thanks to the terms of the settlement agreement, we will never know whether it included interest and compensation for the harassment and mental stress over the past five years, when she found that the so-called expert wealth managers from the bank had misguided her on almost every investment -- a dubious smart loan for her home, unit linked insurance products and churning of mutual funds. Ms Krishnamoorthi had availed of help from Disha Financial Counselling, where R Gopalakrishnan had helped her crystallise her loss. This was then presented to the RBI as well. Moneylife had also helped crystallise the exact loss caused by the churning of her mutual fund portfolio.

 
Here is a narration of how the story unfolded over the past two years:
Moneylife published an expose' in April 2012 on how HSBC looted Ms Krishnamoorthi for over five years by promising an extravagant assured return of 24% from mutual funds as well as insurance.


Last year in November, market regulator SEBI sent a strongly-worded notice to HSBC asking the lender to explain why its acts in handling the portfolio of Ms Krishnamoorthi were not in violation of its regulations governing fraudulent and unfair trade practices and violation of the code of conduct governing mutual fund distributors.


Whenever she complained about losses in her account, the standard reply from HSBC Bank was that the relationship manager has been fired and that the bank will make up for the losses with judicious investments. Needless to say, the losses were never made good.
 
The modus operandi for HSBC in this case had been a combination of toxic churning of the portfolio management system (2% entry load on every purchase made by it on behalf of client), insurance products promising 24% returns, insisting on her taking a loan instead of withdrawing funds without even disclosing that the client was entitled for a smart loan.


The officers of HSBC Bank also informed her that “portfolio management is one of the prime businesses of HSBC Bank other than banking” and assured her “a minimum of 24% pa return” on her investments. However, following her complaint to the officials of the bank, she had told Moneylife that HSBC Bank was claiming that they had not acted as portfolio managers but merely advised on the management of her wealth.


This also is a case of systematic looting and exploitation of emotionally vulnerable who had received Rs3.6 crore as part of a settlement in September 2006. The money was supposed to be the means of livelihood for herself and for her daughter. The bank used confidential information about the hefty deposit in her savings account and began to market its toxic services to her. Since bankers are seen as trustworthy, she believed that her relationship manager was advising her correctly.


The end result after five years was Rs83 lakh—direct loss from investment, about Rs28 lakh in commission to HSBC, Rs8 lakh (50% of investment) lost from an insurance policy, Rs10 lakh (again, 50% of investment) valuation decline in insurance policy still in force, Rs4.5 lakh tax paid on redemption of short-term mutual funds (including Rs1.85 lakh penalty to the Income Tax department due to non-disclosure of gain by HSBC to the client) and Rs58 lakh interest on home loan earned by the bank. Of this, only the interest component on the loans seems to have been seriously disputed by the bank.  

 

Moneylife reviewed Ms Krishnamoorthi’s mutual fund transactions and found massive malpractices by HSBC


• Her mutual fund portfolio was continuously churned resulting in high transaction costs in the form of entry loads and exit loads. While several transactions led to huge losses for her, HSBC was the gainer of commissions.


• Out of the 75 transactions made, nearly 60% of the transactions were in equity schemes kept for a period less than one year. Here investments were made in schemes like HSBC India Opportunity Fund and HSBC Mid-cap Equity Fund, both of which have been underperformers. Apart from these, majority of the investments were made in balanced schemes of HDFC Mutual Fund, ICICI Mutual Fund and Sundaram Mutual Fund.

 

• The worst part of the transactions came around the market peak in November 2007 where nearly Rs3 crore was invested across five schemes on a single day which included over Rs1.67 crore invested in three sector schemes—ICICI Prudential Infrastructure Fund, Sundaram CAPEX Opportunities and Reliance Diversified Power Sector. Nearly Rs50 lakh was invested in Sundaram CAPEX Opportunities which has a current corpus Rs200 crore.


• The investments from all sector schemes were withdrawn between June and August 2010 at a loss of nearly Rs40 lakh, almost half her initial investment. The schemes from ICICI Mutual Fund and Sundaram Mutual Fund went down by nearly 50%. The other schemes were also withdrawn at a value 15%-30% lower resulting in a total loss of Rs86 lakh. These schemes included JP Morgan India Equity Fund (a poorly-performing scheme) and IDFC Premier Equity Fund.


• Surprisingly, in the whole portfolio there was not a single debt scheme and just one liquid scheme— HSBC Cash Fund. Ironically, commissions paid on debt schemes and liquid schemes are much lower.


• Ms Krishnamoorthi says an entry load amounting to over Rs29 lakh was deducted from her investments. If the bank had opted to only invest her amount of Rs3.60 crore in performing equity schemes for the long term, without any further buying or selling, the entry load of 2% at that time would have worked out to just Rs7.20 lakh.  

 

When Ms Krishnamoorthi wished to surrender her insurance policies, HSBC refused to act for her by contending that they no longer had any tie-up with Tata AIG and that it was not their business to get client’s money back that they had recommended in the first place.


“It took my chartered accountant six months to authenticate the figures of losses—as not only was the HSBC team adept at covering its paper trail. They also very conveniently refused/ evaded furnishing me the documents to which I am legally entitled for over a year—giving me one silly excuse after another like mismatch of signature/ officers being on leave,” she told Moneylife.


Unfortunately, in several such cases, banks tend to get away scot-free because the consumer is conned into signing a number of documents based on misplaced trust in their bankers. For instance when Ms Krishnamoorthi took her issue up with the Banking Ombudsman, the bank replied stating that she had signed on all the letter of instructions (LoIs) to carry out the transactions in her account. The manner in which bank officials discharge their fiduciary duties was not even taken into account.


On 18 April 2013, Moneylife Foundation had presented a memorandum to RBI Governor (http://foundation.moneylife.in/?page_id=2000 ) on unchecked mis-selling by bank relationship managers. It says, “Banks’ relationship managers have been particularly brazen in recommending financial products to their customers while completely disregarding their financial situation. It is commonplace to hear of a senior citizen being conned into investing in a mutual fund, unit-linked insurance plan or a hybrid-derivative product on the promise of higher returns. In many cases, private bank executives go over to their homes and persuade them to break secure fixed deposits and invest the money in unit linked insurance products (ULIPs) with the false assurance that these are as safe as fixed deposits and offer a higher return and security.”


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COMMENTS

Anand Jain

5 years ago

We had an exact same problem from HSBC with exact same excuses. The relationship manager forged the client signatures and invested 11 lacs dubiously with Tata AIG. It took us a one and half year battle to get our money back. The relationship manager went scot free.

REPLY

rajivahuja

In Reply to Anand Jain 5 years ago

Why doesn't the bank do something. with the relationship manager.Or is it cahoots with him /her.

rajivahuja

5 years ago

I have successfully unsubscribed from comments Please subscribe me again.

TIHARwale

5 years ago

Welldone Moneylife.

rajivahuja

5 years ago

Encouraged by Money Lfe's relentless pursuit that people cannot just scoot with people's money. I am strongly motivated to file a case on Karvy,Private Wealth & Kotak Old Mutual.Kotak not only mispelled a policy to be . Sold me a ULIP and told me it will fetch a returns of 8% in after 05 years. Tried selling me another ULIP after a month but I put my foot down that I was not going to invest into Kotak schemes any further.Moreover I did not think aULIP was going to give return of 8% in 5 years time particularly that ULIP.

REPLY

rajivahuja

In Reply to rajivahuja 5 years ago

Is any body willing to help me ?

Hari

In Reply to rajivahuja 5 years ago

I am ready to help you.
Mail me your problem.
[email protected]

Khubir

5 years ago

This is very common in Financial Institutions/Broking Industry. Lower Level Mgt are forced and pressurized by their Seniors for Unauthorised Trade, Selling Mutual Fund as well as share trading.
I am into this field. I had a very bad experience working in Share Broking.
No ethics.

REPLY

sathyacumaran

In Reply to Khubir 5 years ago

sathyacumaran
I request ML to take up my case and what ever the charges once its settled as i have valid points its the sebi and nse bse and broking house who had cheated if only ML writes to IIFL and reliance securities within seconds the matter would be settled and once its settled what ever the amount that ML demands would be paid thanks for the effort of Ml

MDT

In Reply to sathyacumaran 5 years ago

Mr Kumar,
Time and again, we are telling you to fight your own case. You call yourself a media person and expect another media to do the legwork and fight for you?
We have already told you in 2011, to take up your issues with SEBI, BSE, NSE or whatever forum that suits you.
AND for the LAST TIME, kindly understand we are a media publication and are not into doing deals or negotations on behalf of investor or anybody else.
Please refrain from using such 'deal' language and "what ever the amount that ML demands would be paid" about and with Moneylife. You have already harassed us too much.

sathyacumaran

In Reply to MDT 5 years ago

sathya cumaran
Thanks we can take the fight on our own and please donot take the milage that sathyacumaran contacted and we have advised as how to proceed hearafter please donot post the money;life alerts as we have decided to take up the case on our way and see that market get an crash both equity and commodity this would be culmunation point for all NGO organisation who are banking on Financial market we also know how to handle the case from our angel we can even post the facts about the indian capital market and stock markets in india from our channel and media thanks hear after we donot entertain ML or Madam Sucheta Dalal to interfere please desist from sending mails to this email id

Milind Chitnis

5 years ago

Well this is really good news.

But even better outcome would have been if somehow this could have been converted into "class action" and ALL transctions could have been scrutinized on the basis of some agreed upon parameters (like high churn ration in portfolio etc).

REPLY

Sucheta Dalal

In Reply to Milind Chitnis 5 years ago

Right. But who would do it? Who would pay for it? We have found that too few people who have lost moony have the staying power or willingness to fight, like Suchitra Krishnamoorthi did. She repeatedly met, called and wrote to all those who needed to be contacted. She didn't give up even when she was fed up. And she did the legwork herself.
Most others want someone else to do their work, spend money for them and follow up!
cheers

Milind Chitnis

In Reply to Sucheta Dalal 5 years ago


Agree 100% with what you say.

But hypothetically of one were to contemplate such a thing (class action on behlaf of all investors), do our rules as they are today permit it?

Just asking.

sathyacumaran

In Reply to Sucheta Dalal 5 years ago

sathyacumaran
thanks for your mail please fight for my case and once when the case is done in favour then what ever the compensation you demand i would pay upfront i would not be in position to pay please kindly take my case where i have solid proof of cheating if you want i could even give the hardcopy of my compliants

sathyacumaran

5 years ago

sathyacumaran
Madam sorry if it had hurt your feelings please take this appeal as earnest appeal and try to settle my issue if you could send my grievances from your letter head the matter could be solved please help through Disha foundation or ML help please consider me as your own brother and help leave alone the media and journalist feather of mine


Mothit

5 years ago

This is really a great news. This is the second case on HSBC. The other case on HSBC Gilt Fund, HSBC has lost the case in the month of January 2014 and had to compensate the investors for the loss incurred on their change of investment pattern. Its not new to HSBC to treat their customers unfairly. Take the recent issue where bank account holders in UK were not permitted to withdraw in cash. There is callousness from HSBC side in the way they communicate and behave with their customers. And I do not expect them to change their attitude towards their customers.

T S Harihar

5 years ago

Well if Suchitra Krishnamurthy was dumb enough to believe in 24% return, then she has only herself to blame. It looks less like an admission of guilt by HSBC and more an attempt to hush up the matter, considering the high profile nature of the client..

REPLY

Suiketu Shah

In Reply to T S Harihar 5 years ago

Disagree strongly.Wealth managers take advantage of "lack of knowledge of equities" of HNI clients in such cases.Which is why one needs to take a tough stance with wealth managers.

I am 100% sure Suchitra Krishnamoorthy wl never in her lifetime make a mistkae in invesment even 1/100% of what she did with HSBC now.Best is to get educated yrself in equities in the right way and then you donot need so called "wealth management experts" who are basically swindlers unable to earn money ,specialise is deliberate wrong calls(like making you buy at high price operator driven stocks)and good mainly for people who want to convert black into white or vice versa.

rajivahuja

In Reply to Suiketu Shah 5 years ago

I agree with Mr Shah.

CHOON TSHERING LEPCHA

5 years ago

Moneylife great job..personally benefitted from your timely intervention when one of the health insurance company blocked the premium paid twice & refused to return the excess premium for well above one & a half month..thanks for helping me.

PRABHAT

5 years ago

I HAVE MY PERSONAL EXPERIENCE WITH - BAJAJ ALLIANZ LIFE INSURANCE /SBI LIFE INSURANCE / RELIANCE LIFE INSURANCE /TPDDL /IGL / ELECTRONIC ITEM DEALERS ETC , IS THAT CONTINUOUS FOLLOW UP IS REQD TO GET THE RESULTS . EVEN APPROACH TO VARIOUS AGENCIES LIKE CONSUMER FORUM IS ALSO REQD . EVERY BODY TRIES TO MAKE FOOL THE CONSUMER .

REPLY

sathyacumaran

In Reply to PRABHAT 5 years ago

sathyacumaran
Even this Moneylife would champion the cause only media fame personality they are not interested in helping the fellow journalist and media personality because once they champion the cause of fame realted person their name would get popular and as such our cases we have seek only media and channel not from india from foreign platform in which case the indian adminsitration would be scanner view where the officials of these insitutions would be main culprit the rule makers are rule brakers in india which ML knows if they wish they could help us let us wait and see whether they take up our case in which case hats off to ML otherwise just like populastic scheme of political party this Foundation is also for name and fame would be published from our platform let us give some more thime and chance

pushkar kulkarni

In Reply to sathyacumaran 5 years ago

dear sir ji

why not have dharna/ protest AAP style?? get real, the media as you claim to be working for , should have some credibility /power?!

doors should open for you with the media backup..

Sucheta Dalal

In Reply to sathyacumaran 5 years ago

Mr Satyacumaran
Let me repeat for the 100th time, we do not see why we should take your case up. If you are a media house, as you claim, you should be able to fight your own battle. We fight for people who dont know how.
Also, since you post comments on all our articles, you jolly well know how many people are helped.
And finally, you may have forgotten that you were threatening and demanding that we take up your matter , so we decided not to.
Not other magazine does the work we do. Even in the NGO, we do it on best effort basis and reserve the right to disallow membership.
We came up with this rule, only when some people began to monopolise our very limited time and resources and worse, even after having helped them in 10 different cases, were arrogant enough to say it was not good enough!!

Jerin Chacko

In Reply to Sucheta Dalal 5 years ago

Dear Madam, I have been helped by ML Foundation and Shri R Gopalakrishnan of Disha in a case where there was no money or investment involved. Rather a credit card company was sending me statements for an account operated by another person having the same name as mine. I am happy to say he took the pains to guide me over two 30 minute telephonic sessions, which helped me solve my problem.

Mr Satyacumaran appears to have difficulty in communicating his problem because of language barrier, I hope he is able to reach an amicable solution.

Sucheta Dalal

In Reply to Jerin Chacko 5 years ago

Exactly. Mr Satyacumaran can always take an appointment and come for counselling to Disha. He has never wanted to follow any process other than posting relentless comments on our articles. Our numbers and email ID are published. We dont say NO to anyone for Disha Counselling, or any of the helplines. The question is, is he even a member of Moneylife Foundation (FREE membership) . Has he approached Disha? There is no language barrier -- he communicates perfectly by himself and through some colleagues. He tried threatening us to take up his case to avoid bad publicity. That was funny. WE told him, if you are so powerful as a "international" media entity, why not take up your own case? Maybe use diplomatic channels?

sathyacumaran

In Reply to Sucheta Dalal 5 years ago

sathya cumaran
Madam I am furstrated and that is reason why i have given such refrandum please tell as how the matter has to be approached since our way of approaching any govt institution is the method which we do and since In India we donot have solid base so we have to depend upon please provide Disha counselling email id and address and contact number so we need my matter to be solved rather confronting with you if any of mails had hurt your feelings i sincerely apologize for the same we never meant to hurt anybody feeling that an NGO organisation like ML and madam like Sucheta Dalal i feel sorry and ask for excuse if it had hurt your feeling the intention is to solve and as you know the words and language outburst our feelings that would hurt you please help me if you send an mail to IIFL and Reliance securities with mentioning my case we are sure they would solve it within hours such is power of your Institution we seek your humble help in sorting my issue sorry for those harsh mails please forgive me as mentioned we have used harsh words in expressing our grievances

sathyacumaran

In Reply to Jerin Chacko 5 years ago

sathya cumaran
Thanks for your mail if you send your email id i would post my problem and please on behalf of me present the problem to Ml and try ot find some solution
i need your mail id

sathyacumaran

In Reply to Sucheta Dalal 5 years ago

sathyacumaran
Madam if it had hurt your feelings and your institution i am sorry as we are an freelance journalsit and media association from singapore and i happened to be india representative since our is freelancing many organisation assign jobs on an contract basis and we execute as such we donot have any basis as of our own that is reason why we have mailing and sending mails if it had hurt the feeling of MS Sucheta Dalal we seek her apologize and try to help me

rajivahuja

In Reply to Sucheta Dalal 5 years ago

Fair enough.

Nilesh KAMERKAR

In Reply to sathyacumaran 5 years ago

Is this some kind of ' Bura na mano, holi hai' types comment . . . Aakhir, kehna kya chahte ho bhai?

sathyacumaran

5 years ago

sathya cumaran
singapore media and channel group
Thanks to money life please take my case of both with India Infoline stock broking firm as well as Reliance securities and try to get justice for which we the employees of singapore media and channel group would be thank ful for money life group and thank madam Sucheta Dalal and her team mates please consider this case

Suiketu Shah

5 years ago

Super news on this sunday.Congrats Moneylife and well fought by Suchitra KrishnamoorthyI had said a few months ago she wl 100% get her money back.These fraud financial "wealth management" experts are lucky they are in India.If they were in a first world country they would be behind bard till death.Truth is most of them are unable to earn money which is why they restore to such tactics of defrauding rich HNI clients.

One of the biggest frauds I have come across in the wealth management industry in India is one Parimal Shah who superceded they recommendations of his own bank and in a typical Marwadi style made his cronies(only fit to be courier delivery boys) attempt wrongdoings against me.

Founder of the nation and the greatest Indai ever Mahatma Gandhi has truly stated an eye for an eye makes one blind.This is the only way to deal with seasoned fraud wealth management experts.

Once again super news.Wel done Ms Dalal ,Mr Basu and ml and congrats for not giving up Suchita Krishnamoorthy.

REPLY

sathyacumaran

In Reply to Suiketu Shah 5 years ago

sathya cumaran
Can i have your email id so that you can suggest as how to tackle my case for this on behalf of singapore media and channel group
would highly indebted to you

call me my mobile number is 09444021822 and email id [email protected]

Suiketu Shah

In Reply to sathyacumaran 5 years ago

Sorry mate.Im not the right person.Just saved my skin thanks to ml with fraud cheat unable to earn Parimal Shah.Am much much much much better in equities now and wl chop off people like Parimal if they even attempt to come in my or my families life now or in the future.Pl take the advise of Ms Dalal,if possible.Good luck sir and have a great week ahead.

CHILUKURI K R L RAO

5 years ago

It is good that loss to Ms.Suchitra Krishnamoorthy is made good. But for each Suchitra there are thousands of investors whose pain goes un-answered.

Upfront commissions are the root cause f the mis-selling that happened and the menace continues even now. Why don't we ask for a ban on upfront commissions and make trail commissions and/or fee the only source of remuneration for financial advisers? Aren't Trail commissions a wonderful tool to align the interest of investors and intermediaries perfectly? Do we need all these regulations to safe guard investor interest if there are no upfront commissions?

S.S.A.Zaidi

5 years ago

Congrats to money life team

Mobile rip-offs are commonplace

With smartphones set to function as a remote control for many aspects of our lives, consumer groups believe that big mobile companies should be held to account for unfair, substandard services.

Consumers International (CI), a global coalition of 250 member organisations has declared that “Fix our phone rights!” will be the theme for World Consumer Rights Day, which is observed on 15th March. CI, which has members in 120 countries believes, “with smartphones set to function as a remote control for more and more aspects of our lives, consumer groups believe now is the time to ensure big mobile companies are held to account for unfair, substandard services”. Instead, it says, “mobile rip-offs are commonplace – from holidaymakers being stung by four figure roaming bills abroad, to customers tricked into paying to receive text messages.”

 

CI has drawn up a consumer agenda for fair mobile services, which outlines what the consumer rights movement wants to see changed. See www.consumersinternational.org/wcrd2014. This includes demands that telecom companies:

provide consumers with access to an affordable, reliable service

provide consumers with fair contracts explained in clear, complete and accessible language

provide consumers with fair and transparent billing

provide consumers with security and power over their own information, and

listen and respond to consumer complaints.

 

CI intends to deliver this message to the International Telecommunications Union (ITU) - the UN body responsible for setting standards in the industry - ahead of the ITU World Telecommunications Development Conference in early April.

 

In the run up to 15 March, which is World Consumer Rights Day, consumer groups will be making one big call on mobile phone service providers to demand better services for the 7 billion mobile users across the globe.

 

Although CI has several member consumer organisations in India, it is unclear at this stage whether any of them are participating in this global effort to pressure telecom companies to treat customers fairly.

The Consumer Education & Research Centre (CERC) , Ahmedabad has organised a four- day programme  to celebrate World Consumer Rights Day, starting 15th March when it will have a discussion with two telecom experts on ‘Phone Users Rights and Redressal Mechanism’ and will also have a discussion on  ‘Consumer Redressal Mechanism’.

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COMMENTS

Reileen

5 years ago

Hi, there are a number of consumer organisations in India which will be participating the WCRD 2014: Fix our phone rights! campaign. Please visit the WCRD 2014 map: https://wcrd2014.crowdmap.com to know more about their activities. You can also write to me, [email protected] so I can provide you contact details if you wish to connect with them. Thank you

Citrus Check Inns mis-selling holiday package as investment plan?

Citrus Check Inns, the new avatar of Royal Twinkle Star Club, is selling its holiday membership as an investment plan to gullible investors. Is SEBI aware about it?

 

Citrus Check Inns Ltd is the new avatar of Royal Twinkle Star Club (RTSC) that was infamous for selling holiday packages to gullible people on monthly instalment basis and promising high returns on their investment. Several agents of both these entities are found hard selling these as investment plans just to earn more commission and also recruiting new agents for marketing it.

 

One investor, Sampath P told Moneylife that, his parents invested in RTSC investment plan. Not being very financially literate they misunderstood the holiday package membership as a recurring deposit plan. They paid Rs500 every month to RTSC in the hope of getting good returns on their investment! On maturity when Sampath and his parents went to collect the amount, after standing in long queue with other investors waiting for their money, RTSC simply refused to pay up. This happened on several occasion, finally the company agreed to pay the money he invested along with some interest. He said there are many other investors who are still asking for their money.

 

Few agents of these companies operate through their own website and sell membership plans. Their sites include presentations and membership plans of both the companies as well as how one can earn income through its plans. Mrs Harapriya, an agent, in her blog titled: Big-Dad’s-Money, posted about how one can become millionaire by being part of its network and investing in its ‘investment plans’ and she typically pitches it in the money-circulation scheme way.

 

“In this world with high rate of inflation everybody wants to become rich overnight. Sometimes question comes in mind, is this possible? I know for getting prosperity in life, hard work is a must, without hard work life becomes a bed of thorns.

 

It is in your hand to make the dream comes true and to walk on the red carpet with roses under your feet. You will earn crores of rupees, dollar, pound sterling even euro. It is all in your hand.  Join citrus check-inns in April by depositing an amount of Rs15,000 or more amount in different holiday plans of the company.”

 

There are many complaints on forums like complaintboard.in regarding ‘investment plans’ offered by Royal Twinkle Star Club. One such victim, Sajid Memon, warns people about the company. He wrote; “Royal Twinkle Star Club is misleading the common public by false selling. The company is really a fake. These people take common people hard earn money, promise 13%, 14% or more interest, and then come up with many excuses and finally disappear. It happened with me. They convinced me, though my family said a no and made me invest.”

 

Both RTSC and Citrus Check Inns are owned by Mumbai-based Mirah group, which runs hotels under the name Citrus and retail food chain restaurants such as Rajdhani, Mad Over Donuts and Falafels. Citrus Check Inns website claims that it gives freedom to its members to travel over 30 Indian and 3,000 overseas destinations.

 

Earlier in February 2012, the MCA has directed a probe into books and records of Royal Twinkle Star Club, following allegations of illegal deposit collection from several investors.  “RTSC offered customers a variety of Investment plans for holidays, Investors have raised concerns as the holiday plans have an option for redemption of the subscription amount. Registrar of Companies, (Roc)Mumbai received complaints from several investors saying that they were approached by agents of RTSC, who guaranteed returns of 1.5 times in 4 years, 1.7 times the investment in 5 years, double in 6.5 years and 3 times in 9 years,” says a report from Business Standard.

 

Omprakash Gupta, chairman and managing director of Mirah group, told the newspaper that there was no probe by MCA into the company books and accounts. Goenka said, “RTSC was marketing holiday plans by subscription to the membership offers, but not collecting deposits. The points mentioned in offer documents are reward points as offered by any credit card company or airline company as bonus reward points.”

 

RTSC in its new avatar as Citrus Check Inns also offers membership plans with different names and features, which are based on the points system. On paying certain amount, the company provide points to investors, which they can redeem at various Citrus hotels. Each point is equivalent of Rs100 and people who do not want to avail holiday plan can ‘rent out’ their holidays to someone else after fulfilling all terms and conditions.

 

The company displays the holiday membership plan in equated monthly instalment (EMI) options for future holidays along with reward point scheme. However, majority of the company agents mis-sell this membership as investment and also promote it as part time and full time earning opportunity. This includes selling of membership plans and adding more people into their network like multi-level marketing (MLM) schemes and earning commissions.

 

One reader told Moneylife, “Citrus Check Inns is selling investment schemes and collecting money from people with promise of returns more than bank and post office, in the garb of timeshare. They are targeting low and middle income people, who do not have much knowledge of an investment product.”

 

One agent of the company wrote on complaintboard.in. It says, "Citrus Check Inns Ltd Refundable membership plan as well as Money Investment plan, because money is collected and pay back after different period. All plans are suitable for every customer plan period is; 5/6/7/8 and 9. It means we called Recurring Deposit / Fixed Deposit/ pension plan and money back term."

 

This comment clearly is intended on selling ‘investment plan’ and not any membership plan of holiday package.

 

What both Royal Twinkle Star Club and Citrus Check Inns are doing, under the pretext of selling membership plan, is nothing but pure collective investment scheme (CIS), as per Securities and Exchange Board of India (SEBI) definition.

 

The SEBI Act, 1992 gives the market regulator power to regulate the working of schemes which are in effect CIS and have the following characteristics:

  • Pooling of money;
  • Entrustment of money to someone such that the investors are not the ones who are   managing their own money; and
  • Sharing of returns from a specified investment
  •  

Money collecting activities of both RTSC and Citrus Check Inns, carry the features of a CIS, specified under Section 11AA of the SEBI Act read with Regulation 3 of the SEBI (CIS) Regulations.

 

Earlier, market regulator SEBI had barred several companies like Osian’s-Connoisseurs of Art Pvt Ltd , Sun-Plant Agro , Kolkata-based Rose Valley group , and Maitreya Plotters and Structures Pvt Ltd from collecting money from public under the pretext of offering ‘investment plan’ and ‘huge returns’.

 

The Rose Valley group was found running a holiday membership plan similar to what is being offered by RTSC and Citrus Check Inn.

 

Our email sent to SEBI, about the money collection scheme of RTSC and Citrus Check Inn, remained unanswered till writing the story.

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COMMENTS

Sumedh Nikalje

1 year ago

Plz help me what should I do
I became victim by citrus company

Sumedh Nikalje

1 year ago

I became victim by citrus Chen inn
Since 14 months I didn't get interest
Plz somebody help me legal procedure

Sambhaji Jadhav

2 years ago

Sir I have been paying regular payment of citrus I have completed fifteen installments they are refusing to pay half amt what should I do

Umesh Patekar

4 years ago

According to me, company never promissed that it would help to become peoples richer over night.
Please understand their plans completely. if you agree to wait till the period as said in plans then invest. in this world every one is trying to bust the successfull companies. sebi till today havent prooved any fraud done by Citrus. Company is doing the business on it's own ways and that to without looting peoples.

taniya naik

4 years ago

Please suggest me whether I should invest in citrus check in lmt. Or not? As one of the agent from company has assured me of getting my money back in cash with the assured interest, after a 6 years of duration.

REPLY

Deepak

In Reply to taniya naik 4 years ago

You can go personally to Citrus office with that agent and meet Manager of company and get all the legal document and then take plans which I did. The best thing is that don't depend on agent because some agent are not properly train. You will get all details.

Deepak

In Reply to taniya naik 4 years ago

You can go personally to Citrus office with that agent and meet Manager of company and get all the legal document and then take plans which I did. The best thing is that don't depend on agent because some agent are not properly train. You will get all details.

Deepak

In Reply to taniya naik 4 years ago

If you are thinking Investment then Citrus Check Inn don't have Investment plan but if you're thinking Holiday plans then Citrus Check Inns have best holiday plans which gives bonus points to enjoy holidays.

taniya naik

In Reply to Deepak 4 years ago

And if unfortunately,due to some circumstances I couldn't go then will I get my money back ??

g lakshmi narayanan

4 years ago

Did you ask the sebi regarding CITRUS CHECK-INNS LTD. REGARding

Deepak

4 years ago

I have my Aunty whoes age about 55 yrs and she had investment in Royal Twinkle and got maturity twice in 12 years. Investors have to go alongwith agent/representative of company to Citrus office and clear thier confusion before investing.

Sachin Aagre

4 years ago

I read all the comments. But my view about the both companies are different. My father made investment in both companies from last 10 years. And he get the returns as per the promise of the company.

Jui Shah

4 years ago

Citrus check inns is a FRAUD company. one of their sales person came to me with lots of good good talks like whenever I want to get my money back they will sell/transfer my certificate to anyone very easily. But these are just false promises and trap to get money. When I contacted the agent he said he can do nothing to sell my plan to anyone, I have to find someone, his senior sales executive tells come personally and talk to manager and endless talks like that. When these cheats want money they come with a sweet tongue and all the service and now they want their client to go from one desk to other to get their money back. I STRONGLY SAY TO ALL DO NOT EVER INVEST IN CITRUS CHECK INNS
I request all the victims of Mumbai of this cheat citrus inn to get together and file a complaint against this fraud company

REPLY

Pawan Tiwari

In Reply to Jui Shah 4 years ago

Pls let me know if you need your money back. below are the contact details - 8898358045 - Mumbai

Sahadev Kadlag

In Reply to Jui Shah 4 years ago

see for yourself first, you wanted to withdraw the amount before the plan expire.
thats no excuse to blame organization. organization given you time period before taking the plan. i agree your agent should help you with that mess. but organization never allows this. you want to withdraw before plan expire there will be 30% deduction in ur deposited amt.

natasha

5 years ago

thk u for dis post..saved my old parents from becoming victims of dis scam

shiv

5 years ago

citrus check inns is a cheating company..
their executives promise lot of things to get the membership.
following points are promised during membership
1.they promise to give complimentary holiday but they deduct from our points
2.they promised to provide 30% discount in asscociated outlets like rajdhani in all seasons..but in rajdhani they say not in the public holiday..SBI credit card is better than this they offer 15% disc.
3.they pronise to give food in club class...in voucher they provide it is dissapearing..
4.citrus check inn properties they see only vouchers...they wont consider at any moment you are member...in fact they don't kn that is membership.
4.their executives are very horrible once u get the membership...they wont bother for you..
5. they promised to give suites room in properties but they will provide you only simple room
6. requesting all humans not go for any membership...
7.they promise you ...they will treat you like a god...but infact they wont bother..
8.nobody responsible person is there to address you any moment..

suyog parkar

5 years ago

I want the contact no. Of sampat or any such investors who was mislead by this company . Because I want to tell one of its agent that such things are happening with the people. He is challenging me that I can't find such investor of citrus inn. Please help me in this as this agent is one of our relative and I can't deny him to not to invest. I need a strong proof for that.

REPLY

yogesh

In Reply to suyog parkar 4 years ago

Hello , plz mail contact me via mail. my mail id [email protected],
I need your help

suyog parkar

5 years ago

I want the contact no. Of sampat or any such investors who was mislead by this company . Because I want to tell one of its agent that such things are happening with the people. He is challenging me that I can't find such investor of citrus inn. Please help me in this as this agent is one of our relative and I can't deny him to not to invest. I need a strong proof for that.

jaideep shirali

5 years ago

I wonder why people cannot see beyond their greed.For example, 150% or 1.5 times returns in 4 years is more than 30% simple annual return. Bank deposits pay around 9 %,tax free bonds pay about 11-12 % pretax, so why would anyone pay over 3 times that rate ? The higher the return, the higher the risk, that is common sense. Yet this story of greedy investors and unscrupulous fraudsters repeats itself year after year.

Deepak

5 years ago

My question is how can a middle class or lower class person paying huge amount to enjoy holiday with family??

They also has desire to go out and enjoy holiday and stay in a good hotel but some cannot afford.

Citrus Check Inn or RTSC is giving holiday points so that minimum amount can invest now for 3/5/6/8 years and then they can utilize their earned points for holidays/vacation.

Only thing is the agent of RTSC/Citrus Check Inn should not mislead people by saying investment plan, agent should say its holiday package.

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