Sebi Levied Rs 2 cr Fine on Saradha Realty

In the high-profile Saradha Realty case, markets regulator Sebi (Securities and Exchange Board of India) charged a fine, amounting to Rs 2 crore on the company, its chief Sudipta Sen and two directors for not complying with its previous directions to wind up illicit money-pooling schemes and refund the investors. Saradha built a ‘brand’ and duped people.

In a Glimpse

• Sebi through an order in April 2013 asked Saradha Realty and also its promoters and directors, to wrap up all ongoing collective investment schemes and (CIS)in order to refund the money taken from investors, with returns, within three months.
• Sebi order had followed a huge commotion in Kolkata and several other parts of West Bengal at that time about the huge funds collected by Saradha group by various schemes. It included those relating to real estate and hospitality projects, and the subsequent alleged non-payment of returns to investors.
• The matter drew lot of political attention and later turned into a huge controversy, resulting into probe by various investigative and enforcement agencies including Sebi.

Present Scenario

In an order passed last day, Sebi has levied a penalty of Rs 2 crore on Saradha Realty India, its Managing Director Sudipta Sen and directors, Hemanta Pradhan and Monoj Kumar Nagel. Sebi said these entities had failed to follow the directions issued by it and carried on as an unregistered CIS. As per the regulator, Saradha Realty is involved in the fund mobilization activity from public via investment contracts by floating CIS and it had launched such scheme without receiving certificate from Sebi.

Sebi General Manager Speaks..

Rachna Anand, Sebi General Manager and Adjudicating Officer is of the view that upon such conclusion and upon being so directed to follow the directions as mentioned in aforesaid order, if the company/ its directors fail to end its existing CIS, fails to refund the money collected by it under the schemes with returns and fails to submit a winding up repayment report to Sebi within a period of three months from the date of order, then, it means, its status is still alive as unregistered CIS.

Furthermore, status of Saradha Realty is still shown as active at the MCA website. Thus, continuing with the mentioned status without having registration certificate from Sebi is in contravention of Sebi Act and CIS regulation, she further added.

Further, not heeding towards the directions issued under Sebi order and acting as unregistered CIS, is definitely a severe irregularity affecting the interest of several investors at large.

She further added that she cannot ignore the seriousness of this matter as no compliance of direction is met till date post the lapse of more than 3 year which definitely warrants the maximum penalty as mentioned in Sebi Act to commensurate the violations committed.

Apart from this, Sebi has not penalized six other persons as they were not directors at the relevant point, whereas another was secretary of the company.These six people were shown to have ceased as directors well before the date of said Sebi order.

To know more about SEBI’s recent activities please refer “PNB Housing Finance gets Sebi approval for Rs 2,500 crore IPO“