Govt to tighten laws defining genuine and Ponzi schemes

  • HT Correspondent, Hindustan Times, New Delhi
  • |
  • Updated: Aug 06, 2013 02:04 IST

In the backdrop of Kolkata-based Saradha group’s money swindling scam, the government is looking to bring in strong laws to check Ponzi schemes and chalk out a clear demarcation between genuine and fraudulent.

Sachin Pilot, minister, corporate affairs, said that the centre and state governments must work in together with the Reserve Bank of India and Securities and Exchange Board of India (SEBI) to ensure that the issue is addressed at the earliest.

“We need to address the issue of Ponzi schemes and it is essential to protect the money of small investors,” Pilot said.

The Serious Fraud Investigation Office is already looking into 67 companies allegedly running Ponzi schemes. Sachin Pilot in a written reply to the Lok Sabha said that all the said companies are being investigated.

The centre has issued an ordinance to empower the  Securities and Exchange Board of India to directly conduct search and seizure operations, access call data records and initiate a crack down on Ponzi schemes.

The move would also help in addressing insider trading while providing more teeth to SEBI to regulate any pooling of funds under an investment contract involving a corpus of R100 crore or more and even attach assets in case of non-compliance.

Until now SEBI was allowed to carry out search and seizure operations only after securing judicial approval from the chief metropolitan magistrate.


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