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The Securities Exchange Board of India has passed an order against Osian’s Art Fund, the first such order of its kind, categorising it as a Collective Investment Scheme ICIS).
The fund had collected Rs.102.4 crore from 656 investors which was to be invested to collectively buy artwork.
The order dated Monday has barred Osian’s-Connoisseurs of Art Private Limited from the capital markets for carrying out a collective investment scheme (CIS) without obtaining a certificate. The regulator has directed the firm to wind up its existing CIS and refund all the unpaid money collected under the scheme to investors.
Complaints following a delay in returning the money as promised to investors after the fund closed resulted in the Sebi investigation.
Sebi had previously sent them a show-cause notice in 2007.
Osian's will also have to pay profits earned that is due to the investors or interest of 10% per annum from the date of investment till the date of refund, whichever is higher.
Failing to do so within three months would mean that Sebi would either initiate prosecution proceedings under section 24 and adjudication proceedings under Chapter VI of the SEBI Act against Osian’s-Connoisseurs of Art and its promoters.
The regulator would also approach the state government or the police to register a criminal case against the firms promoters, directors and persons in charge of business if Osian’s fails to comply.
In addition, Sebi has also said it would make a reference to the Ministry of Corporate Affairs to initiate the process of winding up of Osian’s-Connoisseurs.
Sebi whole time member Rajeev Agarwal passed the order against Osian’s.
