SEBI Chairman U. K. Sinha on Wednesday raised alarm over soaring volume of grey market operations in the country.

Addressing a seminar on `Investment Outlook 2013' organized by the Indian Merchants' Chamber, Mr. Sinha said that thousands of crores were being raised through illegal means and invested in grey market.

Without naming Sahara Group, he said, "There is a famous instance where a company has claimed that it has refunded more than Rs 20,000 crore in the last 3-4 months to so-called investors, out of which more than
90% has been returned in cash. How credible can this story be?"

The capital market regulator has long been entangled in a bitter court battle with Sahara Group, which recently challenged the market regulator's decision to freeze assets of Sahara Group's two companies as well as its Chief Subrata Roy.

Mr. Sinha pointed out that simple ordinary people who are allured to put their hard-earned into such distrustful schemes, and the money is then taken out of the legal framework.

The Chairman also assured that the capital market regulator would take all necessary measures to save small investors from harm.