Moneylife Events
Dr Subramanian Swamy says everyone should be bothered about rampant corruption – Part 1

The Janata Party President, speaking at Moneylife Foundation’s second anniversary program,...

Premium Content
Monthly Digital Access


Already A Subscriber?
Yearly Digital+Print Access


Moneylife Magazine Subscriber or MSSN member?

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
A small correction round the corner: Monday closing report

Watch if Nifty goes below today’s lows

The Asian market opened positive, on the back of a strong close in the US on Friday (thanks to solid US jobs growth data), and so did the domestic indices. Each of the five weeks since the start of the year the Sensex and the Nifty have made weekly positive gains. Today is the fifth consecutive day when the indices have ended in positive. However, as we mentioned in our weekly closing report, the upmove may pause for a day or two. We had also mentioned that the Nifty may be seen moving in the range of 5,220 and 5,395. The Nifty almost reached the upper level today. The benchmark has to hold above today’s close to reach the level of 5,445 else we may see it tumbling to the level of 5,255. The National Stock Exchange recorded had a volume of 98.37 crore shares traded today

The Sensex and the Nifty opened at 17,742 and 5,379 respectively. In the morning session itself the indices hit their intra-day highs at 17,830 and 5,390. However after the opening of the European market, the indices lost their strength to hit their intra-day low at 17,595 and 5,327. The Sensex closed at 17,707, 102 points up (0.58%) while Nifty closed at 5,362, 36 points up (0.67%). The highest closing for Nifty since 3 August 2011.

European stocks fell as the deadline neared for Greece to reach a deal with its creditors. Greek Prime Minister Lucas Papademos struck a tentative deal with party leaders to extend spending cuts after euro-area finance chiefs told them an increase in the 130 billion-euro ($170 billion) aid package wasn't forthcoming. Greece's leaders will meet today to complete an accord as international creditors imposed deadline in Athens for a final deal today.

Asian stocks pared gains after the International Monetary Fund said China’s economic expansion would be cut almost in half if Europe’s debt crisis worsens. That scenario would warrant “significant” fiscal stimulus from the nation’s government, the IMF said.

India is facing some challenges on its stable rating outlook and the balance of risk factors for its rating may be shifting slightly toward the negative, said Standard & Poor's Ratings Services today. In 2012. S&P does not expect to downgrade or revise the outlook on India's long-term rating in the near future, it said in the report.

India's fiscal deficit during April to December was 3.81 trillion rupees, or 92.3 percent of the full-year target. It is widely expected to breach the 4.6 percent deficit budgeted for the fiscal year ending in March.

The European indices were mostly in red, and so were the US Futures indices. Shanghai Composite, KLSE Composite, Nikkei 225, Straits Times, Seoul Composite ended in positive while Hang Seng, Jakarta Composite, NZSE 50, Taiwan Weighted ended in negative


Kerala government’s guidelines in favour of MLMs says expert

While intention of the state government may be genuine, its new guidelines for direct selling companies will not curb the menace of MLMs but in fact would shield them

The guidelines being framed by the Kerala state government to distinguish a genuine direct selling company from fake one are grossly inadequate and misleading. According to an expert in reality, it (the guidelines) aims to protect the fake money multiplier companies and schemes. Kerala is trying to become the second state, after Manipur, to have separate guidelines for multi-level marketing (MLM) companies.
Robert FitzPatrcik, co-author of False Profits, the first book-length analysis of pyramid schemes and multi-level marketing, told Moneylife that, “The rules (being framed by Kerala government) noted are grossly inadequate and misleading and, I fear, will  result in the tragedy of  millions more people falling victim to pyramid frauds that are disguised to look like legitimate sales companies. By prohibiting requirements to recruit others or to buy products, and by requiring that all payment be based on a purchase, the rule has "validated" a pyramid scheme that is disguised as a sales company, but, beneath the disguise, is perpetrating a blatant fraud.”

Mr FitzPatrick is also founder and president of ‘Pyramid Scheme Alert’ and is based in the US.
The Kerala government had set up a high-level committee headed by the chief secretary following the complaints of few direct selling firms, calling themselves genuine, which were affected by the drive of the investigating agencies to weed out ‘get-rich-quick’ companies. The guidelines were approved by the state cabinet on 12th September 2011.

According these guidelines, any direct selling company would be considered ‘valid’ if it does not directly ask seller or a consumer to purchase any product or collect membership fees as a condition precedent for enrolment. The compensation should be based solely on the quantum of goods and services. These entities would also require giving full refund to consumers who have returned the unsatisfied goods within 30 days.
Mr FitzPatrick says that either handing over cash or purchasing products, these schemes still remain fraudulent. “The fraud lies in the false and misleading income proposition, not in the official requirements regarding products and purchases. It matter little if a person is defrauded by handing over cash or by purchasing products. If the fraud that induced the payment or the purchase are the same, and the net effect is the same -- huge losses -- then the policies protected no one. Indeed they achieved the opposite by giving protection to the scams.”

Apart from legally registering and filling necessary tax returns mandated under law, according to the guideline, these direct selling entities should also have a valid license or a registered trademark identifying its promoter, goods and services. They should also maintain websites with complete details of the company, and other such as price, terms and condition of its products/ services.

However Mr FitzPatrick says that the new policies of this state would legitimize a gross unfair and deceptive marketing practice. “Allowing the endless chain promise to drive purchases corrupts and pollutes the market place. It lures millions to join the schemes in the desperate need, not of the products, but of income. Yet, these schemes, by their design, cannot offer income to any but a few. To all others, the schemes, by design, cause financial losses.”

He adds, “For this income promise to be valid, the chain of salespeople would have to extend forever, which obviously it cannot. Those who join later will not be able to gain the income because they will not be able to enroll enough new members. So the harm of the pyramid scheme occurs, just as if the money were directly transferred rather than through product purchases.”

In India there are various direct selling firms such as Amway, Herbalife, Tupperware have huge market base and membership with turnover amounting to several crore.
The sales people, according to the directive, should carry their identity card issued by the government while selling the product. It should also furnish full details of the order date, amount, and bill to the consumer. Interestingly, the direct seller should take prior permission or appointment of the person to whom the goods or services are intended to be sold.

It is important to note that, apart from Kerala, other states like Manipur, Rajasthan, Maharashtra and Andhra Pradesh are keeping tight vigil on ponzi schemes.

Moneylife had reported that Kerala, said to be the country’s most literate state, is flooded with numerous ‘get-rich-quick’ or ‘earn-huge-return’ schemes offered by money swindlers. While the state director general of police has admitted noticing frauds amounting to over Rs1,000 crore, the worrying factor is that even a few policemen have been found to be involved in these MLM schemes.

Mr FitzPatrick says that actual fraud in MLM is the deceptive promise. “The fraud of pyramid scheme is not in whether money changes hands directly or throughout the vehicle of a purchase. The fraud is in the deceptive promise which cannot be fulfilled. The rule would not prohibit the use of this "endless chain" lie. It would, in fact, validate it by merely requiring that it assume a disguise and enact meaningless "policies" that have no effect in practice.”



shyam sundar

5 years ago

The glaring example is the transfer of all the IPS officers who had filed criminal cases against the fraudulent companies for indulging in money circulation schemes.
It is a shameful act on part of the Kerala Government for shifting all the honest officers.
It shows that the Government is actually supporting the criminals.



In Reply to shyam sundar 5 years ago


After all it is a Congress Government that is ruling Kerala now. What more can we expect?

David Brear

5 years ago

'MLM income opportunity' fraud, is a form of self-perpetuating ritual belief system, instigated for the clandestine purpose of human exploitation. In other words, the 'MLM' victims' belief is genuine, but what they believe in (i.e. a lawful means to achieve 'financial freedom' by converting others, etc. ad infinitum), is false. Any less-than intellectually-rigorous legislation which fails to take account of the quantifiable evidence (i.e. the effectively total lack of income-tax payments by so-called 'MLM direct sellers') is, therefore, fundamentally flawed and dangerous. Self-evidently, the de facto agents of 'MLM' racketeers (i.e. the officers of the so-called Indian Direct Selling Association) have been allowed to write their de facto bosses' own inaccurate, misleading and toothless 'guidelines' in Kerala. This ongoing attempt by foreign based 'MLM' racketeers to subvert the democratic process and rule of law in India in order to exploit millions of Indian citizens, is a far more serious crime than any mere fraud.


5 years ago

The intention of the Kerala government was not genuine. It is increasingly become clear that the guidelines was framed only to protect the MLM swindlers.

A company named 'penta world India' on Janaury 1, 2012 advertised in a local vernacular that they would abide by the guidelines and continue with their business !!!. Please note that many criminals cases are pending against the functionaries of this company and offices were closed down by the Police. The Police say they were doing money circulation business.

P M Ravindran

5 years ago

Nothing surprising here. A govt that survives by selling liquor and lottery tickets only (apart from polluting the environment in general and fresh water sources in particular!) cannot be expected to do anything better!

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)