Sebi foils duping bid, warns investors -Governance Now

Sebi foils duping bid, warns investors

Syndicate was promising higher returns to lure people

GN Bureau | April 10, 2013

The Securities and Exchange Board of India (Sebi) has foiled an attempt by a syndicate to dupe an individual on the pretext of providing higher returns on investments made by his deceased son. The economic offences wing (EOW) of Delhi police is now probing the matter, though no arrests have been made.

The matter came to light when an individual filed a complaint with the regulator saying that he was approached by unknown persons promising attractive returns on investments made by his deceased son if he made additional investment.

“Sebi had received a complaint from an investor that some unknown persons claiming to be 'agents' and 'brokers' of mutual funds and insurance companies have been contacting the complainant saying that the deceased son of the complainant had invested in mutual funds and they are maturing in a short while,” the market watchdog said in a statement Tuesday.

“In order to get the full amount, the complainant must issue a cheque in advance for a new mutual fund scheme or insurance policy failing which the complainant will lose a substantial portion of the maturity amount as broker commission.”

The complainant was informed that his son had purchased mutual fund products which were to mature soon and would fetch a return of Rs 5 lakh on maturity and this could be increased to Rs 12.5 lakh if the complainant made a further investment of Rs 2.5 lakh, Sebi said.

Initial investigation undertaken by the regulator along with the EOW revealed that the accused had been using were issued in the name of a person different from the accused. “Sensing a clear attempt to defraud, cheat and misappropriate as well as mis-sell financial products, Sebi deputed an official to visit the 'complainant' at the time of the visit of the 'agent'.”

Speaking to Governance Now Sandeep Goyal, joint commissioner of police, EOW, said, “A case under relevant sections has been registered against unknown persons. We have not been able to make any arrests so far and since investigations are at the preliminary stage further details cannot be divulged.”

Sounding alarm that it was a planned attempt by several people, the market watchdog has said that the number of victims duped by such phony syndicates could be “much higher”. The regulator has asked investors to exercise caution by verifying credentials of people approaching them as agents/employees with offers to make investments.

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