What do you understand by the word "Ponzi Scheme"? Who regulate the Collective Investment Scheme? List any four key aspects for launching a Collective Investment Scheme.

A Ponzi Scheme is an investment from where clients are promised a large profit in short term at little or no risk at all. The Securities and Exchange Board of India is the regulatory authority of the Collective Investment Scheme. The Key aspects for launching a Collective Investment Scheme (CIS) as per the SEBI (Collective Investment Scheme) Regulations, 1999 are given hereunder - The company floating CIS shall have to seek registration with SEBI as Collective Investment Management Company (CIMC). CIS shall be constituted as a two tiered structure comprising of a trust and a CIMC. At the time of application for Registration as CIMC, these entities should have a minimum networth of ₹ 3 crores which shall have to be increased to ₹ 5 crores within three years from the date of grant of registration. Every collective investment Scheme shall have to file offer documents with SEBI containing adequate disclosures to enable the investors to take informed investment decisions. Each collective investment scheme shall have to obtain a rating from recognised credit rating agencies. The collective investment scheme must also be appraised by an appraising agency. The collective investment schemes are prohibited from guaranteeing assured returns. Indicative returns, if any, provided by the collective investment scheme shall be based on the projections in the appraisal report. Advertisements in respect of every collective investment scheme shall have to conform to the SEBI's advertisement code. No collective investment scheme shall be kept open for subscription for a period of more than 90 days. The collective investment schemes must indicate the minimum and maximum amount proposed to be raised over this period. The collective investment schemes shall be close ended in nature. The duration of the collective investment schemes shall be for a minimum period of 3 years. Compulsory Insurance cover for the assets of the collective investment scheme and personal indemnity cover for the CIMC shall be obtained. Units issued under the Collective Investment Schemes are to be compulsorily listed on recognised stock exchanges.