SEBI moves against `illegal' collective investment schemes
08 February 2012
Securities and Exchange Board of India (SEBI) has sought government action against companies that illegally collect money from the public under the collective investment scheme.
The market regulator said it has a list of hundreds of companies that collect money from investors illegally for real estate properties, plantation and agriculture, art funds, time-sharing schemes and multi-level marketing schemes.
SEBI said it would share with the ministry of corporate affairs the names of the directors of the companies that have raised money from investors in violation of Collective Investment Scheme (CIS) Rules.
SEBI wants the ministry to circulate the names of defaulter CIS entities and their directors among all the registrars of companies (ROCs) in the country so as to prevent them from being associated with any new company.
Alternatively, SEBI may also overhaul the current CIS regulations if needed, in order to remove any loopholes in the existing rules, sources said.
Under the collective investment scheme, an entity collects money from investors for certain pre-specified purposes and distributes the profits or income.