The Central Bureau of Investigation (CBI) on Monday searched the offices and residences of three senior officials of the Securities and Exchange Board of India (SEBI) in Mumbai in connection with their investigation into the Saradha Group.
The agency, the sources said, conducted searches of six locations connected to SEBI officials, two of whom are CEOs and one is a deputy CEO. All three were published in the SEBI office in Calcutta between 2009 and 2013.
The Saradha Group, which had illegally collected deposits from individuals, went bankrupt in April 2013 after defaulting on payments to depositors. The group raised Rs 2.4 billion from some 17 lakh small investors through various collective investment schemes. The bankruptcy of the checking fund had allegedly sparked several suicides in eastern India.
Subsequently, the president of the Saradha Group, Sudipta Sen, was arrested along with two of his associates for defrauding depositors. Several TMC leaders have been linked to the Saradha scam. The group has yet to return the principal amount of Rs 1,876 crore to investors.
“The CBI is investigating accusations against officials for extending undue benefits to Saradha Group, as it was regulated by the market regulator, Sebi, under the rules of the collective investment scheme (CIS),” said a source.
SEBI has been investigating Saradha’s case since 2010 when it first received a complaint from the West Bengal Economic Crimes Investigation Cell (EOIC) against the illegal money-raising activity of Saradha Realty India Ltd. However, it approved its first order against Saradha Group only in 2013 after the collapse of the group.
According to an order from Sebi in April 2013, one of the group’s firms, Saradha Realty, had collected advances from investors as contributions towards the award of parcels of land with a promise to deliver the land to the investor by paying all the dues. The company had submitted plans to allow contributions ranging from Rs 10,000 to Rs 100,000 with a tenure ranging from 15 to 120 months.
In the event that an investor did not want the land, the money raised had to be returned at 12 to 24 percent interest. Sebi said the company had a collective investment scheme as the real objective was “to mobilize funds from the public by showing some real estate projects to investors” and indirectly promising “return on funds with high interest rates.”
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