In its biggest ever crackdown, capital market regulator Sebi on Friday ordered the closure of a Rs. 50,000-crore collective investment scheme run by Pearls Agrotech Corporation Ltd (PACL) and directed the company to refund investors’ money within three months.
The amount mobilised by the company, according to the Sebi order, is Rs. 49,100 crore. “This figure could have been even more if PACL would have provided the details of the funds mobilised during the period of April 1, 2012 to February 25, 2013,” Sebi said in its 92-page order.
Sebi said it was initiating action against the company and its nine promoters and directors for violating its Collection Investment Scheme Regulations.
PACL has 58.5 million depositors, making this by far the biggest crackdown both in terms of the amount involved and number of depositors affected.
The ongoing Saradha scam, which came to light in 2013, involved a sum of about Rs. 20,000 crore collected from an estimated 1.7 million people.
The CBI is probing PACL and its promoter Nirmal Singh Bhangoo. Sebi had first ordered in February 1998 that PACL could “neither launch any new schemes nor continue raising funds under its existing schemes.”
The company had claimed it was engaged in the business of buying and selling land. Sebi alleged that PACL was pooling investments from investors for this purpose and hence, it was a collective investment scheme (CIS), which are popularly known as Ponzi schemes.
PACL had then taken Sebi to court. The Supreme Court directed in February last year that Sebi should determine if PACL was indeed running a CIS, and proceed accordingly.
Reacting to the order, PACL said” “Sebi has unfortunately failed to recognise the submissions of the company that it can’t be treated like a CIS. The company would now appeal this order before the Securities Appellate Tribunal.”