Govt proposes to arm SEBI with more power to tackle Ponzi schemes

The proposals to make required amendments in the SEBI Act and other relevant regulations have been finalised after detailed consultations with SEBI and are being presented before the Union Cabinet for its approval

 
With an aim to provide stronger powers to the Securities and Exchange Board of India (SEBI) for taking on perpetrators of Ponzi schemes and other fraudulent activities, the government has proposed to arm the market watchdog with direct powers to carry out search and seizure operations and for attachment of assets.
 
Besides, it has also been proposed to provide SEBI with powers to seek information such as telephone call data records, from any persons or entities in respect to any securities transaction being probed by it.
 
The proposals to make required amendments in the SEBI Act and other relevant regulations have been finalised after detailed consultations with SEBI and are being presented before the Union Cabinet for its approval, a senior official said.
 
A Cabinet note in this regard has also been circulated by the Department of Economic Affairs to other departments in the finance ministry, as also to the corporate affairs, home, law and telecom ministries, along with to the Reserve Bank of India, Planning Commission and Prime Minister’s Office for their comments and feedback on the proposals.
 
After getting the Cabinet’s approval, the government plans to introduce the Securities Laws (Amendment) Bill, 2013, in Parliament to carry out the proposed changes for grant of stronger powers to SEBI, the official added.
 
SEBI has been seeking an overhaul of regulations governing its powers and mandate for a long time, given the changing nature of the securities market in general, and newer tools being used by manipulators to take gullible investors for a ride, in particular.
 
The government has decided to accept most of the proposals made by the market regulator in this regard and the amendments would be carried out after the Cabinet approves the move and the required amendment bill is passed by the Parliament, he added.
 
With regard to the regulation of Collective Investment Schemes (CIS), the proposal calls for SEBI being empowered to deal with all kinds of investment schemes involving pooling of funds totalling Rs100 crore or more. Also, any investment scheme floated by a ‘person’ and not only a ‘company’, has been proposed to be brought under SEBI’s jurisdiction for CIS activities.
 
The proposed amendment seeks to bring all kinds of Ponzi schemes, which are thriving in various semi urban and rural areas at the expense of gullible investors, are brought under SEBI’s oversight, which itself would be made much more effective to safeguard investors from being defrauded.
 
Besides, the government has also proposed to provide SEBI with direct powers to conduct search and seizure with authorisation from its chairman. Currently, SEBI can conduct search and seizure only after approval from the chief metropolitan magistrate, but this provision is often seen to delay proceedings and hamper the confidential nature of probe.

User

BOI AXA Equity Debt Rebalancer Fund: A dynamic scheme aiming to time the market

A handful of dynamic schemes vary their allocation to equity according to a pre-defined formula. Some of these schemes have done no better than any other equity diversified schemes. Would the new scheme from BOI AXA Mutual Fund be any better?

 
Last year, Bank of India re-entered the mutual fund business by acquiring 51% stake in Bharti AXA Mutual Fund. Now known as BOI AXA Mutual Fund, the asset management company is probably planning to set itself apart by launching schemes different from that of other fund houses. Earlier the fund house filed offer documents for hybrid schemes with gold as an asset class—BOI AXA Gold Income Stabiliser Fund and BOI AXA Triple Asset Allocator Fund. The company recently filed an offer document to launch an open-ended dynamic asset allocation fund—BOI AXA Equity Debt Rebalancer Fund. The fund will invest in two asset classes namely; equity and debt securities. Similar to the Triple Asset Allocator Fund the proportion of the portfolio invested in equity or debt is determined based on the month end price-to-equity (PE) ratio of the CNX Nifty Index.
 
The scheme has the flexibility to vary its allocation in equity and debt from 10% to 90% depending on the PE ratio of the Nifty index. “If the valuation of the broader market measured by PE ratio is high, the fund will take greater exposure to debt and vice versa. The proportion between equity and debt securities is determined by PE bands,” mentions the offer document. The allocation would be defined as per the table below:
 
 
Does the scheme make sense? 
We have analysed such market timing schemes in the past. (Read: Dynamic Plans:Dart-throwing) The schemes which invest based on PE valuation of the CNX index have done relatively well compared to other schemes. However, the proportion of equity to debt of all the three schemes vary. Therefore, even the fund houses are divided on an optimum allocation at a particular PE. Another important factor that would affect returns is the stocks selection of the scheme. For the equity portion of the new scheme, stocks would be chosen out of the top 100 companies by market capitalization listed on the National Stock Exchange and the Bombay Stock Exchange. What if the PE of the overall market is low but that of stock selected is high or vice versa? Stock selection would impact the performance of the scheme, maybe even negating the . A better way would probably be to use a market-timing strategy along with a top mutual fund scheme (Read: SIP vs Market-timing)
 
Alok Singh, chief investment officer-fixed income, would manage the debt portion of the scheme and has seven years of experience in the mutual fund industry. Gaurav Kapur, who has just five years of experience in research & fund management, would manage the equity portion.
 
Other details of the scheme:
Benchmark : CNX Nifty: 50% + Crisil Short Term Bond Fund Index: 50%
 
Load Structure:
Entry Load – Nil
Exit Load – 1% if redeemed within one year from the date of allotment
 
Minimum application amount:
Rs5,000 and in multiples of Re1 thereafter
Minimum Additional investment:
Rs1,000 and in multiples of Re1 thereafter
Investment through SIP/STP:
Monthly SIP: Rs1,000 and in multiples of Rs100 thereafter
Minimum duration: 12 months
 
Expenses:
Maximum total expense ratio (TER) permissible under Regulation 52(6)(c)(i) and (6)(a): Up to 2.50%
Additional expenses under regulation 52(6A)(c): Up to 0.20%
Additional expenses for gross new inflows from specified cities: Up to 0.30%
 

User

After 21 years, Maharashtra issues circular for anti-terrorism day

After almost 21 years since Rajiv Gandhi was assassinated, the Maharashtra government issued a circular to observe 21st May as anti-terrorism day 

 
While several states across the country mark 21st May as anti-terrorism day, in remembrance of former prime minister Rajiv Gandhi, the government of Maharashtra has finally woken up to the idea. After almost 21 years, since Rajiv Gandhi was assassinated, the Maharashtra government on 16 May 2013 issued a circular to observe the anti-terrorism day from this year onwards.
 
Surprisingly, it took a letter (warning) from the Union home ministry for Maharashtra government to come up with its own circular for observing 21st May as anti-terrorism day in the state.
 
The letter was sent by Bhagwan Shankar, joint secretary in the Union home ministry, on 8 May 2013. Acting swiftly on the letter, the state government then issued its circular within a week after receiving the warning letter, claims social activist Anil Galgali.
 
Galgali, also an avid RTI activist said Maharashtra government was never serious on the issue (terrorism) and it took the warning letter from Union home ministry for the state machinery to issue a circular after 21 years.
 
Galgali had also sent a letter to the President of India, prime minister and chief secretary, urging them to enquire in to the delay in issuing the circular and take action against the officer/s responsible for the 21-year delay.
 
The day is observed to generate awareness in the country among all sections of people, about the danger of terrorism and violence and its effect on the people, society and the country as a whole. 
 
It was on this day in 1991 that Rajiv Gandhi fell to the designs of terrorists. This practice to observe 21st May as anti-terrorism day began in 1992. However many states including Maharashtra ignored it every year. 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

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)