amount of money from the public without any requisite regulatory approvals and for dubious investment projects.
"People make all sorts of excuses - in some cases they claim they are under the state government, some cases they are saying they are registered with the Ministry of Corporate Affairs, some cases they are saying they are housing companies and in some cases they claim to be NBFCs," Sebi Chairman U K Sinha had said.
"And in most cases, they say that we are not under the Sebi jurisdiction," he added. The Serious Fraud Investigation Office (SFIO) – under the Corporate Affairs ministry -- is working on an early warning system that would help in preventing corporate frauds. It has set up a computer lab to keep a tab on working of MLM companies.
SFIO is already investigating alleged scam at SpeakAsia, which is registered in Singapore. The ministry had ordered the probe into it early last year.
The Corporate Affairs ministry has also asked the Registrars of Companies (RoCs) to be alert about activities of the multi-level marketing companies, particularly where they give advertisements.
The inter-ministerial panel, headed by the Consumer Affairs Secretary, felt that the Financial Services Department should be the nodal point to deal with matters relating to these marketing schemes.
The committee was constituted in July this year by the Consumer Affairs ministry, after it received several complaints regarding alleged large scale frauds by multi level
marketing companies, which included defaults in payments and operators disappearing with the money collected from public.
The committee was mandated to examine the complex issues related to the working of such firms, fill the regulatory gaps and suggest measures to safeguard the interests of the consumers.
The panel also comprised of members from Financial Intelligence Unit (Department of Revenue) and Inspection and Investigation unit (Ministry of Corporate Affairs).