Investor frauds: Vanishing cos, Ponzi schemes face Govt probe
Besides, 87 other companies are also being probed by the government agencies for duping the general public through illegal Multi-Level Marketing (MLM) or Ponzi schemes and West Bengal tops this list with as many as 73 such entities.
The market regulator Sebi has also detected as many as 669 companies to have duped the investors of Rs 7,435 crore through illegal collective investment schemes, Corporate Affairs Minister Sachin Pilot informed the Lok Sabha.
The entities are classified as 'vanishing companies' if they cease to file their balance sheets and other documents after raising capital and the whereabouts of their offices or directors become untraceable.
In the Ponzi or MLM investments, the companies generally raise the money from general public and ask each investor to lure others into these schemes with a promise of huge returns. However, the operators disappear after some time, leaving the gullible investors in lurch.
Giving details of the entities running such Ponzi schemes, as also that of the vanishing companies, Pilot said that Chief Ministers of various states have been requested to issue directions to their respective police authorities to take action against the erring companies.
Pilot said he has also written to Finance Minister to facilitate increased surveillance by RBI over unauthorised NBFCs (Non Banking Finance Companies) to tackle the menace of Ponzi schemes.
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