Sebi on Wednesday cautioned investors against putting their hard earned money in unregulated schemes floated by companies illegally raising funds with promise of exorbitant rates of return.
Such companies are also indulging in issuance of Cumulative Convertible Preference Shares (CCPS) and Cumulative Redeemable Preference Shares (CRPS) without having necessary authorisations or regulatory approvals, the capital markets watchdog said.
Sebi, which has been given powers to take action against all unregulated money pooling schemes worth over Rs 100 crore besides all public issuances of securities, has issued this fresh caution notice at a time when a large number of people have been duped by numerous schemes in various states and enforcement action is underway against such operators.
"It has come to the notice of the Securities and Exchange Board of India that some companies/entities are illegally mobilising funds from the public by making false promise of exorbitant rates of return or interest under various schemes or arrangements," the regulator said.
It also said that schemes offered by cooperative societies, deposits accepted by NBFCs or companies declared as Nidhi or mutual benefit societies under Companies Act, pension or insurance schemes framed under Employee Provident Fund laws or Chit Funds Act are outside Sebi's jurisdiction if they are regulated by some other regulator or law.
"Investors are cautioned not to invest in any schemes or arrangements which are unregulated. Sebi does not guarantee the repayment of money by these companies or entities," it said. Meanwhile the market regulator has asked Sahara Investors to submit their claims by next month along with necessary proof of their investments.
The latest exercise follows a similar attempt made by the Securities and Exchange Board of India (Sebi) in August, wherein the eligible bondholders were asked to submit their refund claims to the regulator by September 30, 2014.
Sebi said it received 4,900 refund claims during that exercise from the bondholders of two Sahara companies Sahara India Real Estate Corp ltd (SIRECl) and Sahara Housing Investment Corp ltd (SHICl), which had raised over Rs24,000 crore from about three crore investors.