Ponzi schemes: Sebi launches 550 prosecution cases

Showing a strong will to take on the perpetrators of illegal money collection schemes, Sebi today said it has launched as many as 550 prosecution cases against those collecting public money in such fraudulent manner.

 

Out of these, Sebi has already banned 15 companies and 130 persons have been booked, the Securities and Exchange Board of India (Sebi) Chairman U K Sinha said here.

 

The issue of garnering of funds through fraudulent investment schemes with promise of huge returns have been hitting headlines quite frequently in recent months.

 

The government last week armed Sebi with greater powers to take on such fraudulent schemes and mandated the capital markets watchdog to regulate all kinds of investment schemes involving a corpus of Rs 100 and more.

 

The grant of greater powers, through an Ordinance, is expected to remove the ambiguity of regulatory jurisdiction for such schemes, as their operators often used to claim that they do not fall under Sebi's purview.

 

Even before the promulgation of the Ordinance, Sebi has clamped down a number of illegal collective investment schemes in the recent months, including on entities from Saradha, MPS, Sumangal, Sai Prasad, HBN, Alchemist Infra, Maitreyi and Rose Valley groups.

 

Talking about some of the actions taken by the market regulator against raising of unauthorised money, Sinha said: "Sebi has launched 550 prosecution case against people collecting money illegally, out of which 130 people had been booked with banning of 15 companies."

 

He was speaking at an investor awareness programme here.

 

Sinha also rued the fact that a survey jointly conducted with NCAER (National Council of Applied Economic Research) has found that about two-third of the investors were taking investment decisions on the basis of advice from non-specialists such as family members, friends and on the basis of media reports.

 

Sinha said that Sebi has received 1.10 lakh phone calls in the last six months from investors for their various grievances. Out of these, Sebi has solved around 90,000 complains and 50% of those complaints were resolved in less than one month, he added.

 

Besides, Sebi has taken action against 400 companies for not joining its online grievance redressal systems (SCORES), Sinha said.

 

On the issue of the mandatory 10% public float for public sector companies, Sinha said that the government has assured the market regulator that it would adhere to the deadline of August 8.

 

He also said that risk-based KYC for FIIs would come up soon.