Sebi cracks down on Rs 50,000 crore money-pooling scheme

New Delhi: In its biggest-ever crackdown on a large-scale illicit money pooling scheme estimated at nearly Rs 50,000 crore, regulator Sebi on Friday ordered immediate closure of unauthorised collective investment schemes run by PACL Ltd and refund of investors' money within three months.

Besides, the capital markets regulator also said it is initiating further proceedings against the company and its nine promoters and directors for fraudulent and unfair trade practices, as also for violation of Sebi's CIS Regulations, among others, as per a direction from the Supreme Court.

As per Sebi's 92-page order, the total amount mobilised by the company, "by its own admission" comes to a whopping Rs 49,100 crore and "this figure could have been even more if PACL would have provided the details of the funds mobilized during the period of April 1, 2012 to February 25, 2013".

The number of customers through which the money could have been collected is estimated at around 5.85 crore, which includes the customers who said to have been allotted land and who are yet to be allotted the land, Sebi said.

This is the biggest ever amount, as also the largest number of investors, so far involved in a case found to be unauthorised 'collective investment scheme' by regulator Sebi.

Among others, PACL and its top executives, including Nirmal Singh Bhangoo, are being probed by CBI as well. Besides, this is is also one of the longest-running cases under the scanner of Sebi, which had first intimated PACL more than 16 years ago way back in February 1998, that it could "neither launch any new schemes nor continue raising funds under its existing schemes."

While the company maintained that it was not running any illicit scheme and was in fact engaged in the business of sale and purchase of land, Sebi issued a notice in November 1999 to PACL, alleging that it "was operating CIS, wherein the funds of the investors were pooled and utilized towards the cost of land, registration expenses, developmental charges and other incidental expenses."

The case later went to courts, while the Supreme Court passed an order in February last year directing Sebi to determine whether the business of PACL fell within the purview of CIS or not, and accordingly take further action in accordance with the law.

Promoters and directors of PACL Ltd have been involved with Pearls Group and PGF Group, among others.