Govt mulls stronger laws to curb Ponzi schemes: Sinha

With a mass of investors believed to have been defrauded by Ponzi schemes in West Bengal, Securities and Exchange Board of India (Sebi) Chairman U K Sinha today said the regulator was working on counter measures. “Within the powers given to us, Sebi is working extremely hard to ensure that savings of small investors are not put to risk,” Sinha said. He, however, said Sebi has some legal limitations and he would not be able to comment on specific issues concerning certain companies, as there had been some court and quasi-judicial orders as well in certain cases.

“I’ll, however, like to assure you all that we are alive to the task given to us within our mandate,” he added. He was replying to queries about an alleged fraud by the Kolkata-based Saradha group through its investment schemes. Sinha was speaking at a public seminar here of the Asia Pacific Region Committee of IOSCO, a global body of securities regulators from across the world of which Sebi is a member.

The government is seriously considering strengthening of laws to regulate all kinds of collective investment schemes (CIS), Sinha said. Sebi has already passed an order against Saradha Realty India to close all its CIS and refund the money collected within three months. The regulator has also barred Saradha Realty India and its Managing Director Sudipta Sen from the securities markets till the time it winds up all its CIS and refunds the entire money to investors.

When asked about regulating CIS, Sinha said there should be a single regulator in this regard. “But the type of instances that have come to our notice, there is a case for strengthening. Our position is that ideally there should be one single regulator for the entire CIS and all the schemes,” Sinha said.