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2015 (6) TMI 1256 - THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAIMis-selling of schemes to the public - "Ponzi Scheme" - company refused to refund the money invested by the complainant in June 2012, when the complainant approached the company for refund of the money as she wanted to discontinue with the plan - preliminary inquiry into whether or not Citrus is carrying on activities of 'collective investment scheme' in terms of Section 11AA of the SEBI Act - HELD THAT:- Promoters/Directors/persons in charge of the business of Citrus. Incidentally, the same Directors are also the promoter/directors of Royal Twinkle against whom directions were passed by SEBI on March 07, 2014. Furthermore, SEBI has received several investor complaints against Citrus alleging that Directors of Royal Twinkle are now running their collective investment schemes through Citrus. It is obvious that the schemes launched by Royal Twinkle and Citrus are identical in nature and the same management is running the schemes of both the companies i.e. Royal Twinkle and Citrus. This fact is in direct contravention of the assertion made in the company's letter wherein they stated that they have not offered similar holiday plans through its associates, group etc. This indicates that Citrus is deliberately making false/misleading statements. At this juncture, SEBI cannot be a mere spectator ignoring the investor complaints- specially in the light of the fact that the quantum of funds mobilized from public is a pretty sizeable ₹ 777.04 Crores as on March 31, 2013. As detailed before, Citrus has steadfastly refused to give the latest and relevant information to SEBI despite being given several opportunities to do so. The trail of all these events as well as the conduct of Citrus lead me to draw a prima facie inference that the refusal to give information is nothing but an attempt to conceal the real nature of its fund mobilizing activities. Protecting the interests of investors is the first and foremost mandate for SEBI. Therefore, steps have to be taken in the instant matter to ensure that only legitimate investment activities are carried on by Citrus and no investors are defrauded. Further, in order to safeguard the assets/property acquired by Citrus and its promoters/directors using the funds collected from the investing public until full facts and materials are brought and final decision is taken in the matter, it is incumbent on SEBI to take preventive action by way of an immediate measure. Thus no other alternative but to take recourse to an interim order against Citrus and its Directors for preventing them from further carrying on with its existing fund mobilizing activity by launching 'collective investment scheme', without obtaining registration from SEBI in accordance with law. This order shall be treated as a show cause notice and Citrus and its Directors may show cause as to why the plans/schemes identified in this order should not be held as a 'collective investment scheme' in terms of the Section 11AA of the SEBI Act and the CIS Regulations and why appropriate directions under the SEBI Act and CIS Regulations, including directions in terms of Regulations 65 and 73 of the CIS Regulations should not be issued against them. Citrus and its abovementioned Directors may, within 21 days from the date of receipt of this Order, file their reply.
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