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

Sunrise Agro Pooled Ventures, which holds no SEBI registration, runs an arrangement pooling investor money to be managed on their behalf. Investors have no day-to-day control. Under Section 15D(a) of the SEBI Act, 1992, which statement about the penalty is correct?

Running a collective investment scheme without the required registration attracts a penalty under Section 15D(a) of not less than one lakh rupees, extending to one lakh rupees per day of the default, with a maximum of one crore rupees. The older ten thousand rupees per day formula was replaced.

  1. AIt is a penalty capped at ten thousand rupees per day or ten lakh rupees, whichever is higher
  2. BIt is a penalty of at least one lakh rupees, extending to one lakh rupees per day, subject to a maximum of one crore rupeesCorrect
  3. CIt is a penalty of five thousand rupees per day with no overall ceiling
  4. DIt is a penalty of three times the gains made, with no fixed ceiling

Explanation

Section 15D(a) applies where a person sponsors or carries on a collective investment scheme without the required registration certificate. The penalty is not less than one lakh rupees, may extend to one lakh rupees per day of the default, and is capped at one crore rupees. The ten thousand per day / ten lakh figure is the old pre-2014 position that was substituted.

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