Sebi imposes securities market ban on 8 entities for misusing client funds

Sebi has barred 8 entities from the securities markets for up to seven years and imposed penalties totalling Rs 11.5 crore on them in a case related to misuse and diversion of clients' funds

Sebi on Wednesday barred eight entities, including BRH Wealth Kreators and BRH Commodities, from the securities markets for up to seven years and imposed penalties totalling Rs 11.5 crore on them in a case related to misuse and diversion of clients' funds.

Individually, the regulator has slapped a fine of Rs 5 crore each on BRH Wealth Kreators and BRH Commodities and Rs 1 crore on Anubhav Bhatter, who was the director of the two companies and also held significant beneficial interest in these firms. These three entities have been prohibited from the securities markets for seven years.

Also, a fine of Rs 10 lakh each has been levied on five entities -- Prosperous Vyapaar, Polo-Setco Tie Up, Parton Commercial, AB Investments and Bluesnow Supplies. They have also been restrained from the securities market for five years.

 

In its order, the Securities and Exchange Board of India (Sebi) said BRH Wealth Kreators and BRH Commodities have violated regulatory norms by misappropriating clients' funds or securities and diverting funds to five related entities.

The related entities have also played a major role in aiding and abetting BRH Wealth Kreators and BRH Commodities in misappropriating the securities and funds of their clients, it added.

By indulging in such acts, the entities have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules. In addition, BRH Wealth Kreators and BRH Commodities have flouted SCRA rules as they failed to segregate securities or funds of their clients and diverted them to third parties.

SCRA refers to Securities Contracts (Regulation) Act.

Also, Sebi has asked BRH Wealth Kreators, BRH Commodities and Bhatter to jointly refund the money as well as return the securities due to investors of BRH Wealth Kreators under the supervision of the National Stock Exchange (NSE).

NSE Defaulters Committee has been asked to expeditiously open a dedicated demat account where all the securities lying in the demat accounts of the two stock brokers would be transferred.

In October 2019, Sebi, through an interim order, barred several entities, including BRH Wealth Kreators, BRH Commodities and Bhatter from the securities markets till further directions. In January 2020, the regulator confirmed the directions against these entities.