BackSebi imposes $1 billion fine on PACL, directors
The fine is among the highest-ever penalties imposed by the capital market regulator on any entity
PremiumMumbai: Capital market regulator Securities and Exchange Board of India (Sebi) has imposed a penalty of nearly ₹ 7,269.50 crore on PACL Ltd and its directors for illegally collecting money through investment schemes without the requisite regulatory approvals.
This is among the highest-ever penalties imposed by the capital market regulator on any entity. In August last year, Sebi ordered PACL, formerly known as Pearl Agrotech Corp., to refund at least ₹ 29,420.65 crore raised from 58.5 million customers through collective investment schemes.
“Keeping in view the entire facts and circumstances of the case, I am of the view that there cannot be a better case than this which deserves imposition of maximum penalty, and if it is done so, then it will give a strong message to the securities market at large that such type of violations will not be viewed lightly," said the Sebi order.
PACL had challenged the Sebi order in the Securities Appellate Tribunal (SAT), which dismissed the appeal.
As per the adjudication order issued on Tuesday, PACL and its directors—Tarlochan Singh, Sukhdev Singh, Gurmeet Singh and Subrata Bhattacharya—illegally mobilized an amount of ₹ 2,423.17 crore. Sebi regulations allow the regulator to impose a maximum penalty of three times the illicit gains.
Sebi’s investigations showed that the company had allotted land to about 12.2 million customers till March 2012, when its total customer advances stood at ₹ 14,331 crore.
On 11 August 2014, Pearls Agrotech told Sebi that it had collected another ₹ 29,420.65 crore from 46.31 million customers to whom it was yet to allot land.
The Sebi order had further said the company did not have enough land and plots to meet the allotment requirements for customers who have been investing money in the company’s two schemes.
“In the recent past, the country suffered a lot at the hands of entities who indulge in such illegal money mobilization under various schemes, wherein the hard-earned money of the common man has been duped. Thus, imposition of deterrent penalty is the need of the hour," said the order issued on Tuesday.
“...the whole amount, which has been illegally raised under collective investment schemes, without obtaining registration from Sebi, during the period 6 September 2013 to 15 June 2014, can be considered as amount of disproportionate gain or unfair advantage as a result of the default of not obtaining registration," the order added.
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