With reference to Ponzi Scheme often seen in news consider the following statements 1 It is an inves...........

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With reference to Ponzi Scheme often seen in news, consider the following statements:

1.It is an investment plan in which existing investors is paid from the capital coming from the new investors.

2.It is banned under the Prize Chit and Money Circulation (Banning) Act 1978.

3.These schemes come under the regulatory purview of SEBI.

Which of the statements given above is/are correct?

1 only

1 and 2 only

1 and 3 only

1,2 and 3

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Explanation:

1 and 2 only

The first statement is correct. Ponzi schemes operate by using funds from new investors to pay returns to earlier investors, rather than from legitimate business activities.

The second statement is also correct. Ponzi schemes are typically banned under various laws, including the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 in India.

However, the third statement is incorrect. Ponzi schemes typically fall under the purview of financial regulatory authorities such as the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI), but they are not specifically regulated by SEBI. Therefore, statement 3 is not correct.