Companies violating Sebi Act to face charges
Completing its probe into ‘chit fund scam‘ of 14 Saradha group firms, SFIO on Monday said these companies have been found to be running ‘Ponzi schemes’ and would face prosecution for violation of several laws.
The investigation concluded that the group was using collections from new investors to make payments to the previously enrolled members, rather than from income generated through investments, in typical resemblance to a Ponzi scheme. Among others, the activities of these companies were found to be in serious violations of the Companies Act, the Sebi Act, and several provisions of the Indian Penal Code, the corporate affairs ministry said in a statement on completion of the SFIO probe.
The ministry said those companies which have been found to have violated the Sebi regulations for ‘collective investment schemes’ would be prosecuted for violation of Sebi Act, instead of the Companies Act, as the former carried longer terms of imprisonment.
The companies which have been listed down to have violated these rules will be facing a major problem regarding this. The issue will be taken forward by the ministry.
Source: The Financial Express
14 Saradha group firms, chit fund scam, collective investment schemes, Ponzi schemes, SEBI, Sebi Act, SFIO, SFIO probe
