NEW DELHI: The Cabinet on Wednesday will consider measures to check Ponzi schemes, such as the Saradha chit fund scam that devastated thousands of gullible investors in West Bengal, by arming stock market regulator Securities and Exchange Board of India (Sebi) with enhanced powers to investigate and punish fraudsters.
Sebi will be able to summon any person or entity to assist in an investigation into a chit fund or a para-banking operation if the Cabinet accepts a proposal mooted by the finance ministry. The changes are intended to improve "effective supervision" and take deterrent action swiftly once a breach of law is detected.
Sebi will be able to impose "disgorgement orders" on a company that defaults on its commitments or makes illegal gains. The regulator will use its "inherent powers" to recover ill-gotten gains that will then be utilized to promote "investor protection and education".
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