In a major crackdown on illicit fund mobilisation by a broker, Sebi today ordered refund of money to investors by Sameer Joshi of Shreesurya Investments, who had allegedly promised thousands of investors to double their money in just two years.
Sebi order follows complaints that Joshi had collected Rs 5,000 crore from about six thousand investors. However, the balance sheets of his company for periods between 2010-2012 showed collections to the tune of only about Rs 120 crore from over 4,600 investors.
The regulator has asked him to refund the entire funds collected from the investors within three months.
According to order, Joshi was a SEBI registered Sub-broker during the period of collection of money and was affiliated to Kisan Ratilal Choksey Shares and Securities.
Sebi said he was collecting money from the public by misusing the trade name granted as a sub-broker which violated certain provisions of Securities Contracts (Regulation) Rules, 1957.
As per SCRR, a member of the Stock Exchange is prohibited from engaging in any business other than that of securities or commodity derivatives except as a broker or agent not involving any personal financial liability.
By floating dubious schemes Joshi also allegedly violated certain norms of the Sebi Act and SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.
"It is noted from the investor complaints and the schemes that Sameer Joshi had misused his status as a sub-broker and solicited and collected funds and deposits from them through misrepresentation and allurement of high returns," the Securities and Exchange Board of India (Sebi) said in its order.
"...He is liable to refund the money so collected from his clients and other investors in the various schemes...," Sebi said ordering a refund along with returns that was promised or at an interest rate of 10 per cent per annum, whichever is higher, from the date of investment till the date of refund.
"In view of the gravity of the violations perpetrated by Sameer Joshi as brought in the foregoing paragraphs, I am of the opinion that persons such as Sameer S Joshi should not be allowed to have access to the securities market in view of the possible danger to the investors at large," Sebi Whole Time S Raman said.
Sebi also barred Joshi and his company Shreesurya Investments from the securities market for a period of 5 year from the date of refund.
The regulator said that for making the refunds Joshi can sell assets and the proceeds are to be kept in an interest bearing escrow account to be opened in a scheduled bank.
The order shall come into force with immediate effect, Sebi said.
