New Delhi : Operators of illegal money-pooling schemes will soon face penalties of up to three times the profit made by them, as against the current provision of a meagre fine of Rs one crore.

The capital markets regulator Sebi (Securities and Exchange Board of India) has decided to increase the monetary penalty for those running unauthorised Collective Investment Schemes (CIS), as the existing mechanism have not proved to be sufficient to deter such illegal mobilisation of money.

A proposal to this effect has been approved by Sebi and the same would be notified soon, a senior official told PTI. As per a Sebi memorandum in this regard, illegal mobilisation of funds within the existing legal framework falls within a provision wherein a maximum penalty of Rs one crore may be imposed.   Sebi is of the view that this penalty “is very meagre compared to the money mobilised by unregistered CIS, especially considering that in certain cases the money mobilised is in multiples of thousand crores. Accordingly, Sebi has decided to amend the relevant regulations to provide for “a penalty of Rs 25 crore or three times the amount of profits made, whichever is higher.”

To tackle the growing menace of investors being duped of their hard-earned money through various illegal investment pools, many of which are in the nature of ‘ponzi’ schemes, Sebi has been given the mandate to take action against all such money collection activities involving Rs 100 crore and more.

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