Sebi crings illegal CIS under fraudulent trade practices

Sebi added a 20th clause to the 19 clause set which would attract Sebi's eye

The Securities and Exchange Board of India has brought the illegal mobilization of money through Collective Investment Schemes(CIS) under the ambit of the same set of rules which is used against manipulating share prices and creating artificial volumes in the stock of a company. 

 

The regulator added a 20th clause to the set of 19 which would attract the regulator’s eye under the Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market. 

 

The rules will now include ‘illegal mobilization of funds by sponsoring or causing to be sponsored or carrying on or causing to be carried on any collective investment scheme by any person,” said a Sebi circular on the regulator’s website.

It also added an explanation stating that the given list of violations and who they apply to, mentioned as part of the regulations, is not an exhaustive one. 

 

“…it is clarified that the acts or omissions listed in this sub-regulation are not exhaustive…”it said. 

 

The change came into effect on September 6 th. 

 

The regulator has recently moved against a number of collective investment schemes which looked to collect money without registering with Sebi. The schemes included ones for investment in art, property, animal husbandry and vegetables.