Mumbai: Certain share traders in Kolkata have been offering unbelievable returns to depositors. According to reports, these share traders have been promising returns varying between 60 and 144 per cent annually payable monthly.
Investors have been getting lured into parting with their money as interest rates have fallen and stock markets are down. As avenues of making money have diminished, a section of gullible investors find it attractive to park their funds in such schemes.
These investors are flush with funds, having received huge sums through VRS payments. Reports say about 60 such operators have been identified including Citi Securities, Invesco Securities, Indian Securities and Sai Securities. Reports further say that returns like these are unsustainable, as one depositors funds are used to pay interest and/or principal of another depositor. Sebi has been informed of the development and that it has promised to look into the matter.
Sebi, in the meantime, has launched criminal proceedings against eight Mumbai-based plantation companies for violating the Sebi (Collective Investment Schemes) Regulations, 1999. The companies are: Pan India Forest and Land Development, Rainbow Perennial Krishi, Southern Horticulture and Rubber Plantation, Ace Agro Products, Eternal Agro, World View Teak Rich, Green Gold Agro Products and Green Gold Horticulture.
The companies, which raised crores of rupees from gullible investors, failed to:
- Register their schemes with the market regulator, despite the same being mandatory under the law.
- Refund funds so raised to investors despite advised by Sebi to do so, since the schemes had been wound up.
Sebi has also prosecuted the directors of these companies. The late nineties had seen an influx of plantation companies, which promised unbelievable returns to investors by growing teakwood and other trees. These promises came at a time when stock markets were in a bearish phase and investors had lost astronomical sums by putting their money into many vanishing companies.