PACL, 4 directors fined Rs. 2,423 crore by SEBI
Market regulator Securities and Exchange Board of India (Sebi) on Thursday imposed Rs. 2,423 crore fine on PACL Ltd and its four directors for illegal fund mobilisation through various schemes that were used by the group to garner over Rs. 49,000 crore from the public. This is the highest penalty ever imposed by Sebi on any alleged capital market defaulter ever.
While the group, which had collected money in the name of real estate projects among other schemes, was asked by Sebi nearly three years ago to refund Rs. 49,100 crore to the investors, the regulator has passed a fresh order to impose a monetary penalty for violation of Sebi’s Prevention of Fraudulent and Unfair Trade Practices Regulations.
The refund process is being overseen by a Supreme Court- appointed committee, which has been able to collect “only a few hundred crores”, Sebi said, while noting that the case requires imposition of a much bigger penalty equivalent to three times of the illicit gains made by them.
However, “as the interest of investor is paramount”, Sebi has decided to impose a monetary penalty equivalent to the profits made through the illegal mobilisation, the 47-page order said. Sebi has asked PACL Ltd and its four directors—Tarlochan Singh, Sukhdev Singh, Gurmeet Singh and Subrata Bhattacharya—to “jointly and severally” deposit the penalty amount within 45 days.
The group was found by Sebi to have collected Rs. 49,100 crore through unregistered collective investment schemes in violation of rules over a period of 15 years. About the latest case, for which the order was passed on Thursday, Sebi said the magnitude of the violation can be assessed from the fact that huge illegal mobilisation of money was made leading to consequent profits to the tune of Rs. 2,423 crore in a short span of less than one year.
The latest Sebi order on PACL follows a SAT order for Sebi on 1 November 2016, in which SAT had set aside Sebi’s order imposing a Rs. 7,296 crore penalty on PACL and its four directors. SAT had directed the regulator to “reconsider the matter afresh”.
Sebi’s penalty order on PACL was originally passed in 2015 after a previous order in 2014 whereby PACL was asked to refund Rs. 49,100 crore it had collected through illicit schemes over 15 years.
SAT had said in its November order that even if the adjudication officer (AO) considers the appellants to be “highly unscrupulous and that the appellants have indulged in fraudulent and unfair trade practices, it was obligatory for the AO to determine the quantum of profits made in such practice and thereafter …impose penalty under Section 15HA of the Sebi Act”.