Sebi clamps down on another Ponzi scheme

The regulator acted on the basis of a June 2011 complaint from the Office of the Directorate of Income Tax

The Securities and Exchange Board of India (Sebi) has passed an order against Basil International, an alleged Ponzi scheme based out of Kolkata. It has asked the company and its directors not to collect any additional funds from investors or dispose of its properties or assets.

The regulator acted on the basis of a June 2011 complaint from the Office of the Directorate of Income Tax (Investigation) against the company. It had carried out a search operation at Basil International's office in Asansol and it had found out that Basil was engaged in taking deposits under the garb of redeemable preference shares from rural people, promising them returns ranging from 11 per cent to 14 per cent. Basil is said to have mobilised at least Rs 95 crore (Rs 950 million).

The money collected was being used to pay huge commission to its agents and invest in its business assets, fixed deposits. Funds were also siphoned off. Sebi attempted to get information from the company but was unable to do so.

"… it becomes necessary for Sebi to take urgent preventive and remedial action," said the order. The order comes into force with immediate effect.