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  • SEBI probes Saradha group for alleged irregularities

    Published on April 23, 2013

    sebi1Amid growing public outrage over an allegedly fraudulent investment scheme run by Saradha group, market regulator has begun a fresh probe into the fund-raising activities of the Kolkata-based entity.

    The capital market regulator is looking into whether its Collective Investment Scheme (CIS) regulations were violated while raising funds from the public, a senior official said.

    The CIS operations are regulated by SEBI and any entity raising funds through this route requires a prior approval from the capital markets regulator. Such schemes typically involve collection of funds from public investors to be pooled for a pre-decided investment objective, but the regulations are very rigorous to thwart any bid to defraud the gullible investors through such products.

    SEBI had earlier also looked into the activities of Saradha group and had informed the state government about the complaints received by it and its views on the case.

    While CIS entities are regulated by SEBI, the chit funds do not come under its jurisdiction and it is the state governments which are mainly responsible for acting against erring chit fund operators.

    Besides fuelling huge protests in West Bengal by investors and agents, an alleged chit fund scam by Saradha group has also snow-balled into a political controversy with various parties blaming each other for not taking enough steps to rein in fraudulent deposit-taking activities.

    A look-out notice has been issued by the Kolkata Police, which is also investigating the case, for Saradha Group chairman Sudipto Sen. Stating that strong laws were needed to curb the illegal activities of chit funds, Banerjee said since their operations were governed by central laws and not by the state government, “the onus lies with the central government”.