Sebi warns investors to stay away from ponzi schemes

Ahmedabad: Sebi chairman U K Sinha on July 30 said small investors should stay away from various ponzi schemes, which promise very high returns in a short duration. Speaking at a financial literacy awareness campaign here, Sinha stated that there are numerous firms running ponzi schemes in India which siphoned of thousands of crores of rupees from unsuspected investors through such fraud schemes.

"Do not fall for schemes which assure unbelievably high returns in a very short time. There are many companies in India which have siphoned off thousands of crores of rupees of investors through such ponzi schemes. Many ponzi operators are also behind bars for duping investors," Sinha said in his speech. He advised investors to save themselves from ponzi scheme scamsters by checking their credentials first.

"Stay away from such schemes, or else you will lose your hard earned money. If someone comes to you and promises high returns, ask him if his company is registered with Sebi or Reserve Bank of India (RBI). If they are not registered, then you must refrain from investing in that company," Sinha said. Though Securities and Exchange Board of India (Sebi) has been taking action against such firms, Sinha said investors may not get back their money easily.

"Many such companies have usurped poor people's money. We have also taken action against 200 such firms. However, no matter how stern action we take, it remains a challenge to get back that money and return it to investors. "It may take years due to several procedures. Thus, the best way is to remain alert and stay away," Sinha added.