September 8, 2017 / 8:51 AM / 10 months ago

India's SEBI fines PACL, four directors $379 mln for fraudulent schemes

MUMBAI, Sept 8 (Reuters) - India’s market regulator slapped a penalty of about $379 million on property developer PACL Ltd and four of its directors on Thursday, in a renewed attempt at sanctioning the firm for what it said were its fraudulent fund-raising schemes.

The fine comes after Securities and Exchange Board of India (SEBI) three years ago had ordered PACL to return the 491 billion rupees it had raised from customers from financial products that promised returns based on land investments.

SEBI labelled those schemes as fraudulent and said the market products were illegal as they had not been registered with the regulator. However, PACL had denied they were investment products or that it had engaged in fraud, and said they were land sales that would not need to be registered with SEBI.

PACL challenged that order with the Securities Appellate Tribunal (SAT), but the court upheld SEBI’s order.

In a 47-page order issued late on Thursday, SEBI said it would impose a fine of 24.23 billion rupees ($379.07 million) for not having registered its schemes with the regulator.

“In my considered opinion, the amount of penalty is commensurate with the defaults committed by the Noticees,” SEBI Adjucating Officer Amit Pradhan wrote in the order.

This is the second attempt by SEBI to fine PACL and some of its directors. In late 2015, the regulator had imposed a penalty of 72.69 billion rupees, or what it then estimated was three times the profits made by the company.

That fine, however, was rejected by SAT late last year after the company appealed, disputing how the profits were calculated. The tribunal sided with PACL and asked SEBI to announce a new fine.

In Thursday’s order, SEBI asked PACL and the four directors - Tarlochan Singh, Sukhdev Singh, Gurmeet Singh and Subrata Bhattacharya - to pay the penalty within 45 days of receiving the order.

PACL and the four directors were not immediately reachable for comment.

SEBI has stepped up its scrutiny of unregistered investment products, plugging regulatory loopholes that had long allowed unregulated entities to raise billions of dollars from small investors. ($1 = 63.8800 Indian rupees) (Reporting by Abhirup Roy; Editing by Shri Navaratnam)

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