Asia Press Agency

Tag: Securities Market

  • SEBI Bans ‘Baap of Chart’ from Securities Market

    The Securities Exchange Board of India (SEBI) has taken decisive action against Mohammad Nasiruddin Ansari, who is known as ‘Baap of Chart’ on social media platforms, including X (formerly Twitter). SEBI has banned him from participating in the securities market due to his fraudulent investment advisory activities. Ansari used his social media presence to offer buy/sell recommendations in the stock market, and his actions have now resulted in significant regulatory consequences.

     

    In its order, SEBI also directed Mohammad Nasiruddin Ansari to deposit approximately ₹17.20 crore in an escrow account. This sum represents unlawful gains generated through his ‘educational courses’ related to the securities market.

     

    SEBI’s order explicitly states that Ansari, and any associates involved, must cease and desist from acting as or holding themselves out as investment advisors. They are prohibited from soliciting or undertaking any activity in the securities market, directly or indirectly, whether registered or fraudulent, under the ‘Baap of Chart’ or any other alias. This stern action by SEBI emphasizes the seriousness of the allegations against Ansari and the imperative to protect investors from unscrupulous practices.

     

    The market regulator further mandates the impounding of proceeds from the bank accounts of the individuals involved, and this action is directed jointly and severally. Additionally, Ansari and his associates are ordered to open an escrow account with a scheduled commercial bank and deposit the impounded amount within 15 days from the date of SEBI’s order. In this escrow account, SEBI will hold a lien, ensuring that the funds cannot be released without SEBI’s permission.

     

    The order issued by SEBI highlights the significant concerns raised by Ansari’s activities on social media platforms. SEBI observed that Ansari portrayed himself as a stock market expert and actively lured investors to enroll in various ‘educational courses’ related to the securities market. Through these courses, he enticed participants to invest in the securities market by making assurances of near-certain profits if they followed his recommendations or advice.

     

    The market regulator’s investigation led to the conclusion that Mohammad Nasiruddin Ansari had collected more than ₹17.20 crore through fraudulent and unregistered investment advisory activities. To support these findings, SEBI presented a detailed order that included references to the various platforms where Ansari was offering his courses. The order even included screenshots of chats between Ansari and his clients as evidence.

     

    This action by SEBI reinforces the importance of regulating investment advisory services in the securities market and ensuring that they adhere to the necessary legal and ethical standards. The protection of investors from fraudulent practices and the preservation of market integrity are paramount goals for regulatory authorities like SEBI.

     

    The case of ‘Baap of Chart’ underscores the need for vigilance in the digital age, where social media can be a powerful platform for sharing information and offering financial advice. Regulators must remain proactive in identifying and addressing unlawful activities that can impact the financial well-being of investors and the overall stability of the securities market.

  • SEBI Introduces Centralised Mechanism for Investor Demise

    SEBI Introduces Centralised Mechanism for Investor Demise

    The Securities and Exchange Board of India (Sebi) has introduced a centralised mechanism for reporting and verifying investor demise, aimed at streamlining the process of transferring assets and securities in the event of an investor’s death. This new mechanism will come into effect from January 1, 2024.

     

    In an effort to make the transmission process in the securities market more efficient, Sebi has established operational norms and obligations for regulated entities, particularly registered intermediaries that interact with individual investors or account holders. The regulator issued a circular outlining the procedures to be followed when an investor passes away.

     

    According to Sebi’s guidelines, when an intermediary receives notification of an investor’s demise, it must promptly obtain the death certificate and the deceased investor’s Permanent Account Number (PAN) from the notifier or nominee. The intermediary is then required to verify the death certificate on the next working day, using either online or offline methods.

     

    The circular states that the intermediary should consider the “Original Seen and Verified” (OSV) status of the death certificate, along with the PAN of the deceased investor, to be equivalent to its own OSV. If the intermediary lacks access to the death certificate or is unable to obtain it, they must inform the nominee(s) that the investor’s KYC status has been placed “On Hold” and request them to provide the necessary death certificate.

     

    Once the death certificate has been verified, the intermediary is obliged to submit a KYC modification request to the KYC Registration Agency (KRA) on the same day. This request should state that “information on death of investor received; death certificate verified” and include the relevant documents.

     

    Additionally, the intermediary must block all debit transactions in the account or folios of the deceased investor. If the death certificate is not received, the intermediary must submit a KYC modification request to the KRA system, stating “information on death of investor received; confirmation awaited,” by the next working day after receiving the notification.

     

    The KRA, upon receiving the KYC modification request from the intermediary, is responsible for conducting independent validation and verification within the next working day. Once the death certificate has been validated, the KRA will update the KYC record as “Blocked Permanently” in the system and notify all linked intermediaries.

     

    To ensure consistency in the operationalization of these procedures, Sebi has urged stock exchanges, depositories, and industry associations such as the Association of Mutual Funds in India (AMFI) and the Registrars Association of India (RAIN) to collaborate with stakeholders, including KRAs, in establishing common Standard Operating Procedures (SOPs). These SOPs should be made accessible on their respective websites as well as those of the intermediaries.

     

    Overall, Sebi’s centralised mechanism for reporting and verifying investor demise aims to simplify and expedite the process of transferring assets and securities when an investor passes away, providing greater clarity and efficiency in dealing with such situations in the securities market.

  • SEBI Renews Licenses of NSE and Indian Clearing Corporation

    SEBI Renews Licenses of NSE and Indian Clearing Corporation

    In a significant development for the Indian financial sector, the Securities and Exchange Board of India (SEBI) has officially renewed the licenses of NSE Clearing Ltd and Indian Clearing Corporation Ltd (ICCL) for an additional three years. This renewal, effective from October 3, 2023, ensures that both entities can continue to operate as clearing corporations until October 2, 2026.

     

    SEBI, as the market regulator, has emphasized that this decision is driven by its commitment to the well-being of the trade, the integrity of the securities market, and the broader public interest. This move comes as reassuring news for investors, market participants, and the financial industry as a whole.

     

    NSE Clearing Ltd, a wholly-owned subsidiary of the National Stock Exchange (NSE), plays a pivotal role in ensuring the smooth functioning of the securities market. It was established in August 1995 and holds the distinction of being the first clearing corporation in India. Moreover, it introduced the concept of settlement guarantee, enhancing the security and reliability of transactions within the market.

     

    On the other hand, Indian Clearing Corporation Ltd (ICCL), a wholly-owned subsidiary of BSE (Bombay Stock Exchange), was incorporated in 2007. ICCL serves as a critical component of the clearing, settlement, collateral management, and risk management processes for various segments of BSE. Notably, ICCL is responsible for settling trades reported on the Indian Corporate Debt Segment and the Mutual Fund Segment of BSE, in addition to clearing and settling trades across various other segments of BSE, including Equity Cash, Equity Derivatives, BSE SME, Offer for Sale, Securities Lending & Borrowing, Debt Segment, Interest Rate Futures, and the Currency Derivatives Segment.

     

    While SEBI has renewed these licenses, it has also underscored the importance of compliance with the conditions specified by the regulatory body. NSE Clearing Ltd and ICCL are expected to adhere to these conditions diligently, ensuring the continued stability and security of India’s securities market.

     

    This renewal of licenses signifies the regulator’s trust in the capabilities and commitment of these clearing corporations to maintain the highest standards in their operations. It is a positive step towards bolstering investor confidence and fostering a robust financial ecosystem in India.

     

    SEBI’s decision to renew the licenses of NSE Clearing Ltd and Indian Clearing Corporation Ltd for three more years reflects its dedication to safeguarding the interests of the financial industry and the public. This move provides stability and continuity in the functioning of these critical institutions within India’s securities market.

  • SEBI to Issue Final Order in Royal Orchid Case

    SEBI to Issue Final Order in Royal Orchid Case

    The Securities and Exchange Board of India (SEBI) announced that it will issue a final order in the Royal Orchid matter after considering the response from the hospitality firm. SEBI’s decision follows a show cause notice it had issued on March 31st, which questioned Royal Orchid and its key personnel over alleged misstatement of the company’s consolidated financial statements for the fiscal year 2021-22. The regulator claimed that these misstatements led to an inflated profit figure of 167%.

     

    SEBI’s show cause notice questioned why the company’s promoters and key individuals should not be issued directions to restrain them from accessing the securities market, associating with listed companies or registered intermediaries, and whether disgorgement of gains from the sale of shares should be pursued against them.

     

    The case has seen developments in various stages. Initially, SEBI issued an ex-parte ad interim order on March 31st, prompting Royal Orchid to challenge it before the Securities Appellate Tribunal (SAT). Last week, SAT ordered a stay on the effect and operation of SEBI’s interim order until August 17th, providing temporary relief to the company.

     

    As the matter progresses, Justice Tarun Agarwala has directed Royal Orchid to file a response to the show cause notice within three weeks. Once SEBI receives the company’s reply, a hearing will be scheduled by the regulator to further evaluate the situation.

     

    In its interim order, SEBI required Royal Orchid to submit a report detailing the adjustments made to the consolidated financial statements for the fiscal year 2021-22 and the resultant impact. This report must be certified by a peer-reviewed chartered accountant who is separate from the statutory auditor.

     

    The case centers around allegations that despite having control over Ksheer Sagar Developers Private Ltd, Royal Orchid did not consolidate it as a subsidiary, instead treating it as an associate. This allegedly inflated the company’s profits for the fiscal year ending March 2022 by 167%. SEBI’s order mandated Royal Orchid to restate its consolidated financial statements for FY22 and prepare similar statements for the fiscal year ending March 2023, taking into account Ksheer Sagar as a subsidiary. The situation underscores the importance of accurate financial reporting and transparency within the securities market.