Skip to main content

Sebi faces hurdles in ponzi scheme money recovery

By
The Securities and Exchange Board of India ( Sebi) has been facing issues in recovering the amount invested by people in unauthorised collective investment schemes ( CIS).
Special courts were to be set up for swift adjudication in such cases. So far, only four have been constituted According to sources, these courts have received 700 cases from various other criminal courts, all pending.
One of the primary reasons for such a delay is that a majority of unauthorised CIS schemes have deployed the money in purchasing land or property in various parts. As land is a state subject, it comes under state and local laws. For instance, laws on land ceiling, agricultural and tenancy rules, town planning laws and development regulations are administered by various state executive bodies.
“Initiation of enforcement proceedings by Sebi for disposal of land/ properties and realisation of monies is marred by operation of local laws and the bureaucratic approaches that come with it,” said Tejas Chitlangi, partner, IC Legal.
In an e- mail response, a Sebi spokesperson said, “Currently, 15 orders against CIS companies are under challenge in the Securities Appellate Tribunal. In all cases, the tribunal has either stayed or directed that no further action, including recovery, be initiated.” Language barriers also arise due the title and other documents pertaining to such lands being in the local language and proceedings before the land revenue authorities and district courts being conducted in local languages, added Tejas.
“Difficulties in auctioning of assets, especially real estate, in small town is a challenge Sebi is not fully equipped with,” said Sandeep Parekh, founder, Finsec Law Advisor.
Another issue is on verifying of title deeds. “ There could be powers of attorney and and other complications with these properties. It is quite possible that some of these owners come up with the objection,” said a real estate consultant, on condition of anonymity. Beside, valuation of each asset is cumbersome. The process takes up to eight months, while some properties need detailed due- diligence and negotiations, he added.
“While Sebi has power to punish the wrongdoers, it may not have power to compensate anyone. To be fair to Sebi, it has passed various orders, though investors do not get their money back and cases keep lingering on in litigation. Also, due to allied proceedings under the State Protection of Depositors Act, Prize Chits & Money Circulation Schemes (Banning) Acts, land ceiling laws, tax and money laundering laws.” said Sumit Agrawal, ex- Sebi official and founder, Suvan Law Advisors, an entity specialising in regulatory affairs.
Business Standard New Delhi,16th November 2016

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more