The Securities and Exchange Board of India (Sebi) began a probe against Green Buds after it came across reports that the firm and its directors had collected Rs 300 crore from 6 lakh investors across Karnataka, mostly villagers and women.
    
As per Sebi's findings, the firm was inviting funds from public under an unauthorized 'collective investment scheme' with promised interest rates of 20-25 percent as returns.

In an order dated May 16, Sebi said that as no prior registration has been obtained by Green Buds for running the collective investment scheme it was "illegally mobilizing funds from the public, which prima facie amounts to a fraudulent practice".

Accordingly, Sebi has directed the Green Buds and its directors -- Bettahalli Ravindranath Lakshmegowda, Jayanthi Subbarayappa, and another associate Aruna Prasad -- "not to collect any money from investors from its existing scheme or to launch any new schemes".
     
Besides, Green Buds and its directors have been asked to immediately submit the full inventory of the assets owned by the firm out of the amounts collected from the "unit holders/investors under its existing schemes".

The entities have also been directed not to dispose of any of the properties or alienate the assets of the existing schemes as well as not to divert any funds raised from public.

Further, Green Buds and its directors have to within 15 days submit information sought by Sebi with regard to its schemes, list and details of investors, among others.

Following media reports, Sebi as a part of a preliminary enquiry into the alleged fraud had gathered information from the website of the company as well as from the website of Ministry of Corporate Affairs.
     
Sebi had also received a complaint from Greenbuds Workers and Depositor’s Protection Committee in March, this year, alleging the company of raising funds mainly from villagers and women offering high rates of interest as returns.
     
It was also alleged that the directors of the company have diverted the funds mobilized from investors and have amassed properties in their own names and in benami names.

The company's scheme pertained to purchase of land from the public funds for developing forestry/agriculture/industry and the profits were to be distributed to the investors.

(Agencies)

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