Taking a veiled jibe at Sahara group, market regulator Sebi's chairman U K Sinha said on Tuesday a large company collected $4-5 billion from more than 30 million investors and claimed it was a 'private placement'.
Sinha also said that the first regulatory agency that comes to people's mind is Sebi, whenever the issue comes to fore about investor protection in cases of deposit-taking by unathourised schemes.
Without naming Sahara group, Sinha gave example of ‘a large company’, which raised more than $4 to 5 billion from more than 30 million investors.
"And the company claims it was a private placement.
"Now, how a private placement can reach out to 30 million people is another question?" Sinha wondered.
As per the Sebi rules and the Companies Act, a private placement is defined as issuance of shares or other securities to a maximum of 49 persons and anything involving 50 or more investors is considered a public offer.
Sebi has been engaged in a long-running case with Sahara group over refund of more than Rs 24,000 crore (about $five billion) collected by two Sahara companies from more than three crore investors through issue of certain bonds.
Saharas were asked by the Supreme Court last year to deposit the money to Sebi for further refund to investors after verifying their genuineness and the market regulator recently initiated a process for the refund.
However, Saharas have deposited only Rs 5,120 crore (Rs 51.2 billion) with Sebi and have claimed that more than Rs 20,000 crore (Rs 200 billion) they have already refunded directly to the bondholders.
The case is scheduled for further hearing by the apex court on Wednesday.
Speaking at a venture capital conference here, Sebi chief said that the regulator's aim is to protect the interests of investors and focus on corporate governance.
"When some company, which was not even registered with Sebi, raised money from ordinary investors in the country, for example in West Bengal, people started blaming Sebi.
"It is not one company and there are multiple companies that raised money from large number of investors.
"The perception was that money is lost," Sinha said, while adding that Sebi always steps in to safeguard investors' interest.
"So, we are accountable, as the first agency which comes to anybody's mind is, if there is any issue about investor protection, that's Sebi. We have to be careful about that," he said.