PRESS RELEASE

Pursuant to SEBI Press Release/Public Notice dated 26.11.97/18.12.97, 642 Collective Investment Schemes (CISs) entities had filed information regarding the details of their schemes with SEBI. The SEBI (Collective Investment Schemes) Regulations, 1999 were notified on October 15, 1999. With the notification of the Regulations, no person can carry on or sponsor or launch a CIS unless it obtains a certificate of registration from SEBI under the provisions of the said Regulations. Further, an existing CIS which has (i) failed to make an application for registration to the Board; or (ii) not been granted provisional registration by the Board; or (iii) having obtained provisional registration fails to comply with the provisions of Regulation 71; shall have to wind up its existing schemes and make repayment to the investors.

Subsequent to the notification of regulations, SEBI has received applications for grant of registration from 49 CIS entities. This includes 3 entities which had not filed information with SEBI earlier, but have now filed an application for grant of registration. 

Taking into account CIS entities which have made an application for grant of registration; CIS entities against whom the Hon’ble Courts have passed specific Orders; CIS entities which have wound up their existing schemes and made repayment to their investors; and CIS entities which have responded that they may not be operating collective investment schemes, Chairman, SEBI, in the interests of investors, has issued Directions under Section 11B of the SEBI Act, 1992 read with Regulations 65 & 73 of SEBI (Collective Investment Schemes) Regulations, 1999 to the remaining 523 CIS entities. These Directions dated December 7, 2000 enjoin these 523 CIS entities to refund the money collected under the scheme(s) with returns which is due to the investors as per the terms of the offer within a period of one month from the date of the Order failing which further action(s) would be initiated against them. The text of the Directions as well as the names of the 523 CIS entities to whom these Directions have been issued are at Annexure A

DIRECTIONS UNDER SECTION 11B OF THE SEBI ACT, 1992 READ WITH REGULATIONS 65 AND 73 OF SEBI (COLLECTIVE INVESTMENT SCHEMES) REGULATIONS, 1999.

You had filed information/details with SEBI regarding your Collective Investment Schemes pursuant to SEBI Press Release dated November 26, 1997, and/or public notice dated December 18, 1997 and/or our letter. Subsequent to the notification of SEBI (Collective Investment Schemes) Regulations, 1999 (hereinafter referred to as the said regulations) dated October 15, 1999, any person who immediately prior to the commencement of these regulations was operating a Collective Investment Schemes(s), shall make an application to SEBI for grant of registration within a period of two months from the date of notification, under the provisions of the said Regulations.

SEBI having regard to the interest of the investors and requests received from various entities, extended the last date for submitting application by existing entities upto March 31, 2000 and the same was intimated by SEBI vide a press release and a public notice. However, you did not apply for grant of registration with SEBI as provided under the said Regulations.

As per regulation 73 (1) of the said regulations an existing Collective Investment Scheme which has failed to make an application for registration with SEBI, shall wind up the existing scheme(s) and repay the investors. Further as per regulation 74, an existing Collective Investment Scheme which is not desirous of obtaining provisional registration from SEBI shall formulate a scheme of repayment and make such repayment to the existing investors in the manner specified in Regulation 73.

SEBI vide letter dated December 15, 1999/December 29, 1999 and also by way of a public notice dated December 10, 1999, had given individual intimation in terms of regulation 73 (2) which casts an obligation on you to send an Information Memorandum to all the investors detailing the state of affairs of the scheme(s), the amount repayable to each investor and the manner in which such amount is determined. Accordingly, you were required to send the Information Memorandum to the investors latest by February 28, 2000.

You have neither applied for registration under SEBI (Collective Investment Schemes) Regulations, 1999 nor have taken any steps for winding up of the schemes in the manner provided under the said Regulation for repayment to the investors. It is, therefore, noted that you have prima facie violated the provisions of section 12 (1B) of SEBI Act, 1992 and regulations 5 (1) read with regulation 68 (1), 68 (2), 73 & 74 of the SEBI (Collective Investment Schemes) Regulations, 1999. 

SEBI also issued a public notice dated March 31, 2000, in the newspapers inviting your attention to the aforesaid position.

Further, a notice dated May 12, 2000, was issued to you asking you to show cause as to why the action as stated therein be not initiated against you. However, you have neither replied to this show cause notice nor have responded to the news paper publication.

Now, therefore, in exercise of the powers conferred upon me under section 11B of the SEBI Act, 1992, I hereby direct you to refund the money collected under the scheme(s) with returns which is due to the investors as per the terms of the offer within a period of one month from the date of this Order failing which the following actions would follow:

1. Initiation of prosecution under section 24 of SEBI Act, 1992 which prescribes imprisonment for a term which may extend to one year, or with fine, or with both against you / promoters / directors / managers / persons in charge of the business of your scheme.

2. You / promoters / directors / managers / persons in charge of the business of your scheme would be debarred from operating in the capital market for a period of 5 years.

3. Writing to the state governments / local police to register civil / criminal cases against you for apparent offences of fraud, cheating, criminal breach of trust and misappropriation of public funds.

4. Writing to the Department of company affairs to initiate the process of winding up of your company.