Sebi, the securities regulator, suspended three firms and ten individuals from the securities market on Friday for illegally raising funds from investors in the name of teak tree investments.
Prime Plantations Pvt Ltd (PPPL), Adhunik Plantations Pvt Ltd (APPL), and Twentieth Century Plantations Pvt Ltd (TCPL), as well as ten persons, including current and former directors of these firms, have been barred from doing business in India.
According to a Sebi order, the companies and four individuals have been banned from the stock market for four years from the date of the refunds to the investors.
In addition, the businesses have been forced to shut down their Green Chip Scheme and refund the funds.
Six more people have been granted a two-year ban as of the date of the decision, which was issued on Friday.
The watchdog looked at the firms’ operations from 1992 to 2019. The companies were found to have introduced similar schemes, known as the ‘Green Chip Scheme,’ in which investors could invest Rs 7,500 and multiples thereof in PPPL and APPL for a group of five teak trees or multiples of five teak trees.
TCPL, on the other hand, gave investors a minimum investment of Rs 5,000 and multiples thereof.
According to the Sebi, it does not appear that these companies were currently selling teak trees when raising funds from their respective investors.
Money was collected from investors by requiring them to subscribe to the schemes rather than selling teak trees, as was previously proposed.
Furthermore, the regulator claimed that the scheme was being run without its approval.
According to the order, PPPL, APPL, and TCPL have mobilised Rs 11.57 lakh, Rs 12.06 lakh, and Rs 3.42 lakh, respectively, under the said schemes. This was against the laws of the Mutual Investment Schemes (CIS).
Companies and existing directors have been advised, among other things, not to redirect any funds received from the general public.
Another order issued by Sebi on Friday prohibited 23 entities from accessing the stock market for engaging in fraudulent trading practises in Sunstar Realty Development Ltd’s shares. The prohibition lasts anywhere from six months to a year.
In another order, the watchdog placed a six-month to one-year market ban on six entities and one person for engaging in fraudulent trade practises in Nouveau Global Ventures Ltd’s stock.