Regulations
SEBI to heavily penalise unregistered CIS or MLM schemes

SEBI decided to heavily penalise unregistered collective investment schemes, or the so-called Ponzi or MLM schemes

Market regulator Securities and Exchange Board of India (SEBI) has decided  to heavily penalise unregistered collective investment schemes, or the so-called Ponzi or multi-level marketing (MLM) schemes. At its board meeting on Monday, the regulator also decided to proceed against individuals for unfair trade practices, including front running, the act of buying or selling scrips in advance based on insider information.

 

The regulator accepted the recommendations of management consultant Oliver Wyman on structural and organisational issues. Following this, SEBI is expected to recommend development of simpler and low-risk products for retail investors and iron out kinks related to distribution commissions.

 

The regulator has agreed to implement a plan for sharper focus on supervisory functions, oversight of listed companies, re-organisation of functional departments, increasing man-power and using IT. It will also adopt better HR practices for training and performance.

 

The board meeting was held even as the Securities Laws (Amendment) Ordinance, 2013 was moved in Parliament to give the regulator powers of search and seizure, recover monies by attachment, settle administrative and civil proceedings, set up special courts and the authority to arrest and detain.

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