Sebi brings CIS offenders under fraudulent and unfair trade practices

Aug 13 2013, 16:02 IST
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SummaryThe capital market regulator has amended the guidelines for fraudulent and unfair trade practices to include all illegal mobilisation of funds

The capital market regulator has amended the guidelines for fraudulent and unfair trade practices to include all illegal mobilisation of funds without obtaining a certificate under the collective investment scheme (CIS) rules.

ďThe board has approved the proposal to declare illegal mobilisation of funds without obtaining a certificate under the Sebi (Collective Investment Schemes) Regulations, 1999, as a fraudulent and unfair trade practice,Ē stated a release issued by the regulator.

According to the Securities and Exchange Board of India (Sebi), the amendment has been made to impose deterrent adjudication penalties on unregistered CIS entities mobilising money. The recent past has seen Sebi acting against many entities running investment schemes, which, according to it, were CIS without its mandatory approval.

The Sebi board, which met in Mumbai on Monday, also added a clarificatory amendment to Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 2003, to enable it to act against individuals in cases related to front running.

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