Indian market regulator slaps $1.1B fine on PACL Ltd

Securities and Exchange Board of India (SEBI), the Indian stock markets regulator, has imposed a heavy fine of $1.1 billion (INR 72.7bn) on New Delhi-based real estate firm PACL Ltd for illegally raising funds to the tune of INR491 bn from the market. Sebi has further directed PACL Ltd to cough up the fine amount within 45 days from the order date. The fine amount is the biggest penalty so far that SEBI imposed on any company.

The Indian stock markets regulator is cracking down on illicit collective investment schemes in the country. SEBI in August 2014 ordered PACL Ltd to return INR 491bn to investors including the promised returns. Challenging the Sebi order, IPCL Ltd approached Securities Appellate Tribunal (SAT) and lost its appeal also. Securities Appellate Tribunal upheld the order of The Indian stock markets regulator.

PACL Ltd is engaged in developing barren land and grows vegetables, fruits, etc. It also runs a news channel and tourism portal in addition to hotels in Goa and Himachal Pradesh. No officials from PACL Ltd were available for a comment on the latest issue.

PACL Ltd mobilized about INR49,100 crore (INR 49.1bn) through several illicit schemes over 15 years. The real estate firm also mobilized lot of funds in the name of buying and development of agriculture land. Now, the real estate firm has to refund this amount to all the investors. It's learnt that four directors -- Tarlochan Singh, Sukhdev Singh, Gurmeet Singh and Subrata Bhattacharya-- made illegal profits to the tune of INR24bn.

The Indian stock markets regulator can impose penalty of INR250mn or three times of the profit made out of the fraudulent fund raising. As per the Sebi norms, the regulator fined PACL Ltd upto equivalent of three times of its illegal gains.

Sebi is very keen on sending a strong message to the capital markets that fraudulent practices will result in dire consequences. Sebi has also alerted investors to be cautious about such illegal schemes.

The Indian stock markets regulator expressed its concern over fraudulent schemes duping innocent investors as the country suffered a lot from the illegal activities of fraudulent people. Hard earned money of common man is being duped through such fraudulent schemes.

In another case related to depositors' money, recently, Subrata Roy-led Sahara Group was also ordered to refund INR240bn to depositors in a similar case. The company couldn't pay the money and subsequently Roy was sent to jail in 2014 on contempt of court for not refunding the money to depositors.