SEBI investigations have found that many of these schemes are being used for the purpose of money laundering and to channelize illicit funds into the financial system

Amid a countrywide proliferation of fraud investment schemes, the Securities and Exchange Board of India (SEBI) is joining forces with other agencies, including RBI, SFIO, Enforcement Directorate and state police departments, to tackle the menace.

A large number of fraudulent schemes have come to the fore in recent months, wherein gullible investors are promised huge returns of up to 100% in a year or two through “bizarre and innovative” methods, a senior official said.

The investors being taken for a ride include the poor daily-wage earners trying to save a few hundred rupees a month, the middle-class seeking to invest their hard-earned income for decent returns, as also the rich and sophisticated HNIs looking to grow their wealth by investing in property, artworks and the financial markets.

Investigations of SEBI have also found that many of these schemes are being used for the purpose of money laundering and to channelize illicit funds into the financial system, the official said.

Put together, all such schemes are estimated to have raised thousands of crores of rupees from investors across the country.

SEBI on its own lacks full-fledged powers to act against all kinds of “money-pooling” frauds, although a proposal to strengthen its arsenal is awaiting government’s clearance.

In the meantime, the regulator has decided to take a collaborative approach to bring to book perpetrators of these investment frauds, by seeking help from other regulatory and enforcement agencies.

SEBI is roping in other regulators and agencies depending on the needs and nature of the case, the official said, while adding that these entities include banking regulator Reserve Bank of India (RBI), Serious Fraud Investigation Office (SFIO), Insurance Regulatory and Development Authority (IRDA), Enforcement Directorate (ED) and the Economic Offence Wings (EOW) and other police departments in various states.

SEBI chairman UK Sinha had recently said that people are coming up with innovative and bizarre schemes to defraud investors, such as those promising huge returns through investments in goat-rearing and emu bird farming, among others.

Other cases that have come to the notice of the regulator include sale of plots in deserts as agricultural and property development land. It had recently initiated action against a scheme promising huge returns from potato investments.

Many cases have come up in the eastern states of West Bengal and Assam, wherein huge returns are being promised on real estate and hospitality investments. Besides, many such schemes are there in the northern states of Delhi, Rajasthan, Haryana and Himachal Pradesh.

Besides, SEBI last week came down heavily on a leading art fund for running a “collective investment schemes”, including the one wherein it had raised over Rs100 crore. The fund has been asked to wind up all such schemes and return to investors their money with 10% annual return.

A few other art funds are currently being investigated for possible defrauding of investors by violating norms.

While schemes like potato bonds, emu farming and goat rearing are primarily aimed at duping small gullible investors, sophisticated HNIs are targeted for pooling in money for investments in art works, paintings, antiques, real estate properties and other high-end assets.