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Monday, August 4, 2014

High returns in less time may mean big trouble: Sebi

NEW DELHI: As it goes after fraudsters   who dupe gullible investors of their hard earned money, capital markets  regulator Sebi has launched an all-out mass media campaign to make the public  aware about troubles of investing on hearsay and in pursuit of high returns in  less time.

Using various media including TV, radio and print, the Securities  and Exchange Board of India is specially targeting the collective investment schemes (CIS) wherein  investors are promised doubling of their investments within a few months, or guaranteed fixed returns for their  entire life after investing some thousands or lakhs of rupees.

For the  maximum impact, Sebi has roped in professional agencies for these campaigns and
have made them in as many as 13 languages -- Bengali, Assamese, Oriya, Gujarati,  Kannada, Malyalam, Marathi, Punjabi, Tamil, Telugu and Urdu, besides Hindi and  English. These campaigns are being used all over the country with special focus  on states like West Bengal, Bihar, Jharkhand, Chhatisgarh, Odisha, Maharashtra and Tamil  Nadu, where larger number of investors are affected by such schemes.

"Invest thousands. Earn lakhs in no time. How is this even possible?" Sebi says  in one of its latest such campaigns. "High returns in less time is trouble," the  regulator said, while asking the investors to check the investment scheme  details carefully before investing.

In another campaign, Sebi has sought to bust one of the most commonly used  tactics by those selling such fraudulent scheme, where they cite the example of  someone very close having doubled the money in no time. Like a chain reaction,  everyone gives the example of this person, who may not exist at all.

In  a TV campaign, Sebi has used the example of one fictional 'Kumar Sir', who  everyone believes that has earned big returns and therefore they also decide to  follow suit, unless someone asks who was this 'Kumar' actually.

"Do not go by just what  people say and think before you invest," Sebi said, while asking investors to do  their own research to make any investment decision. Besides, Sebi has also been  cautioning investors through its investor education meetings across the country. 
 
A large number of such fraudulent activities, many of which are in nature of Ponzi schemes  wherein money is collected from a large number of investors, and new investors'  money is used to give returns to some previous clients till the operator runs  away, have come to light in recent years.

While more than 500 such  schemes have already faced Sebi's ire for defrauding investors, thousands others  of significant sizes and scales are estimated to be functional in different  parts of the country.

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