SEBI bans Hoffland scheme

The Securities and Exchange Board of India (SEBI) on Thursday directed Hoffland Finance Limited to desist from going ahead with its recently announced `Invest Card’ scheme. The SEBI has clarified that Delhi-based Hoffland Finance cannot launch any scheme till further orders. The regulatory body had in July last year debarred Hoffland from taking up any fresh assignment as merchant banker and portfolio manager till inquiry proceedings pending against the company were completed and further directions issued. This newspaper had reported that Kardam Financal Services, a Hoffland Finance associate, launched a new scheme, called Invest Card, similar to the one which Sebi had suspended. The Invest Card scheme was launched in Mumbai in December 1997 and promised investors with a return of over 27%. In a fax sent from the Hoffland’s Colaba, Mumbai offices, Invest Card said that it is a member of the Cochin Stock Exchange. A company official said Kardam and Hoffland Finance are associatecompanies, and the former uses the 12-odd broking cards of Hoffland for trading in shares. As per the Invest Card’s dubious scheme, if an investor invests Rs 300000 on the ITC scrip, then the company will ensure the scrip goes up. When the scrip goes up, and on Invest Card advice, the investor would sell the scrip and both investor and Invest Card would share profit at the rate of 50% each. Market sources, however, say that considering the current state of stock markets the company’s claim of offering a very high return of 27% seems to be rather ambitious. Kardam is operating at the BSE through Bharatendu Financial Services and Investment Private Limited and at the NSE through Lea Profin Securities Limited Sebi investigations had revealed that transactions undertaken by Hoffland on behalf of its clients under the portfolio management scheme were not in the best interests of clients. It was on this basis that the regulatory body had barred Hoffland from undertaking any such activity.