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CS Executive · Capital Market and Securities Laws · Collective Investment Schemes

Meridian Agro Pooling, a firm in Indore, pools money from investors, manages it for them and promises returns, without holding any SEBI certificate of registration for sponsoring or carrying on a collective investment scheme. Under Section 15D(a) of the SEBI Act, 1992, which penalty applies?

Carrying on a collective investment scheme without a registration certificate attracts a penalty of at least one lakh rupees, extendable to one lakh rupees per day of operation, capped at one crore rupees under Section 15D(a). The older ten-thousand-per-day formula has been substituted.

  1. AA penalty of at least one lakh rupees, up to one lakh rupees per day, with a maximum of one crore rupeesCorrect
  2. BA penalty of up to ten thousand rupees per day or ten lakh rupees, whichever is higher
  3. CA penalty of up to five thousand rupees per day only
  4. DA penalty of three times the gains made, with no upper cap

Explanation

Section 15D(a) as it now reads provides a penalty not less than one lakh rupees, extendable to one lakh rupees for each day the scheme is sponsored or carried on, subject to a maximum of one crore rupees. The ten thousand per day or ten lakh whichever is higher formula was the 2002 version and has been replaced.

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