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Ponzi Scheme

Ponzi Scheme:

An actor faces scrutiny over his alleged involvement in a Rs.1,000 crore Ponzi scheme with 2 lakh investors.

  • A Ponzi scheme is a type of investment fraud that promises high returns with little or no risk to investors.
  • These are investment operations that pay returns to old investors from the money garnered from new investors.
  • It is named after Charles Ponzi, an Italian businessman who ran such a scheme in the 1920s.
  • Ponzi schemes do not fall under the regulatory purview of Securities and Exchange Board of India (SEBI).
  • In India, Ponzi schemes are banned under the Banning of Unregulated Deposit Schemes Act, 2019 and Prize Chit and Money Circulation Schemes (Banning) Act, 1978