The Securities and Exchange Board of India has ordered Kolkata-based MPS Greenery Developers Ltd to wind up its existing collective investment schemes (CIS) with immediate effect.
Business Line in a report (Kolkata firm raises funds from public with ‘green' bonds sans SEBI nod, January 9) said contrary to conditions imposed by SEBI, MPS mobilised funds under CIS schemes with a provisional registration. The provisional registration granted to the company expired on August 20, 2011.
The market regulator in an order passed on May 11, directed MPS to deposit the funds — mobilised under such schemes — totalling nearly Rs 1,170 crore with a nationalised bank in an interest bearing Escrow Account. The amount should be deposited within 15 days from May 11.
Funds via bonds
MPS has been mobilising funds under CIS through instruments such as teak-bond, orchard-bond and agro bond, etc. Most of these bonds offer high returns against paltry investments.
SEBI in its recent order said, “MPS should deposit the amount of Rs 1,169.39 crore, which it has raised through its collective investment schemes, without obtaining Certificate of Registration and in contravention of the conditions imposed under the provisional registration granted by SEBI in August 2009.”
Bars further collection
The regulator further instructed MPS not to collect any money from investors or to launch any scheme; or to dispose of the properties of the scheme acquired in violation of the provisions of SEBI (Collective Investment Schemes) Regulations, 1999.
The company has also been prohibited from operating in the capital market and from accessing the capital market till such time it deposits the amount with a bank.
When contacted, Mr P.N. Manna, Chairman and Managing Director of MPS, denied receipt of any such order. “We have judicial orders to raise funds under such schemes,” he claimed, but did not clarify from which court or judicial authority the company had received a reprieve.
Interestingly, SEBI in its order referred newspaper advertorial issued by the company on March 30, claiming that the “provisional registration granted by SEBI (to MPS) is valid and... MPS group has the verdict of honourable Calcutta High Court to continue their business on an interim basis..” The company had also claimed 14 lakh investors in fold.
Refuting company's claim in the aforesaid advertorial, SEBI said: “The company has wrongly stated in a newspaper advertorial that it is allowed to carry out CIS activities.” Also SEBI claims “there is no prohibition for SEBI from passing appropriate directions in accordance with its regulations read with SEBI Act 1992.”
shobha@thehindu.co.in