Securities and market watchdog SEBI on Friday penalized Sumangal Industries and nine individuals with a penalty of Rs 1 crore.
The Securities and Exchange Board of India penalized the entities for non-compliance with directions to refund money collected illegally via investors.
According to the Sebi's order, Sumangal had collected Rs 85 crore from investors through illegal collective investment schemes (CIS). The firm was running illegal potato purchase investment schemes promising up to 100 per cent gain in just 15 months to investors.
In July 2013, the regulator had passed a ruling whereby the entities were directed to wind up the schemes and refund the money collected within a period of three months. They also had to submit a winding up and repayment report to Sebi in accordance with the CIS Regulations.
However, Sumangal challenged Sebi's July 2013 order before the Securities Appellate Tribunal (SAT).
In February 2014, the tribunal granted extension to the company for refunding money to investors till January 2015 subject to furnishing quarterly report as to the progress made in the winding up of its schemes and refund of the amount to the investors and furnishing further quarterly reports from time to time till January 2015.
However, Sumangal failed to submit quarterly report to Sebi in line with the SAT order following which the regulator filed an application before the tribunal requesting cancellation of the extended time granted to the firm to repay investors till January 2015. The tribunal, through an order in September 2014, recalled its earlier order.
In its fresh ruling, the regulator said the entities "have failed to comply" with the July 2013 order with regard to the directions to wind up the CIS and refund the money collected by the firm under the schemes.
"... entities violating the directions/ orders of the Board seriously compromise the regulatory framework and are detrimental to the interests of the investors," the Securities and Exchange Board of India (Sebi) said.
Noting that such violators should be sternly dealt with and be suitably penalised, the regulator imposed a fine of Rs 1 crore on the 10 entities.
The penalty has to be paid by the entities "jointly and severally".
According to the SEBI order, the nine individuals are identified as Subrata Adhikary, Sajal Bhattacharya, Indusekhar Chakraborty, Madhumita Adhikary, Somnath Adhikary, Gopal Chandra Adhikary, Sarbani Adhikary, Astick Kumar Roy and Debika Adhikary.