Recently there has been a big scam committed bya phoney investment company called StocGuru India. The modus operandy was usual. Promise huge guaranteed return, Create a Multi-Level Marketing mechanism and people keep falling in to the trap.
Here is thearticle from MoneyLife:
Stockguru.India allegedly dupes 2 lakh investors of over Rs1,000 crore
Despite the dubious modus operandi it followed, the company has escaped the regulators’ net
Stockguru.India, (SGI) a fraud company operating as a self-styled
investment adviser, has allegedly duped its investors of around Rs1,000
crore. According to these investors, the company's managing director is
In December 2010, Moneylife had reported about the dubious
modus operandi of Stockguru.India and advised investors to stay away
from investing in the company. (This MLM openly flouts SEBI norms and offers 120% returns in a year through stock market investment!)
Going by the comments posted on consumer complaint forums, as many as 2
lakh investors have been duped of a whopping Rs1,000 crore.
One comment reads: "It's really the height of deception. Lokeshwar Dev
made a lot of promises and played with more than 2 lakh families. I
(had) also invested hard-earned money and even advised many of my
friends … as I found it to be a very lucrative plan. As per Lokeshwar's
comment, he has run away to the US and will not return until he would be
out of IT department boundaries and (it will) take several years. His
web site, contact numbers, top leaders contacts are out of reach, hence
there is nobody to help us."
Another comment says, "Stockguru.India was a pre-planned fraud by
Lokeshwar Dev Jain. In February, he had to return 100% principal amount
taken by his company six months back, so he himself complained to
Income-Tax authorities about surplus cash in his office. Only a handful
amount of money was seized, as Lokeshwar must have withdrawn the entire
amount from the company's account, which is estimated at over Rs1,000
crore, before the raid which he was expecting. He kept making a fool of
everyone for the next two months, so he could escape to the US along
with his family."
SGI is a multi-level marketing (MLM) company that promised 20% returns
per month. The company describes itself as the country's 'Premier
Financial Consultancy', offering trading solutions in equity,
derivatives, currency futures, commodities trading, initial public
offerings (IPOs), insurance (life/non-life), general insurance, mutual
funds, portfolio management services and terminal handling, all under
The MLM company's investment plan was very simple. You pay a minimum
Rs10,000 as investment and Rs1,000 as registration fees. There is no
limit on the maximum amount one can invest. It offers a return of 20%
per month for up to six months and the principal amount invested is
returned in the next six months. It also gives post-dated cheques of the
principal and a promissory note as security. In short, on an investment
of Rs11,000, the company offers to pay Rs12,000 in six months and the
rest Rs10,000 over the next six months, that is a total of Rs22,000 or a
120% return in a year.
Such huge returns were suspicious, given the volatility in the market, but it did manage to attract a lot of investors.
SGI is not registered with the Securities and Exchange Board of India
(SEBI) as an investment adviser, but still offers to trade on behalf of
clients. It also operated without any trading licence from the Reserve
Bank of India and SEBI. So, will the regulators take any action against
the officials of the company?
Moneylife had raised this matter earlier, but it seems that the
regulators ignored the issue. Hope this time around the regulators, who
keep on harping that 'they care of retail investors', will punish the
fraudsters and save the investors.
Moneylife Foundation, an affiliate of Moneylife, that
is a not-for-profit organisation promoting financial literacy, has
always advised people not to invest in MLM companies, which are not
registered with SEBI or RBI. However, people continue to fall in the
trap since they promise high returns.