Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs29 crore on nine entities for misutilisation of investor clients' funds and securities and siphoning off funds. Those penalised by SEBI include Amrapali Aadya Trading and Investments Pvt Ltd (AATIPL), Aadya Commodities Pvt Ltd (ACPL) and their former and current directors.
"In my considered opinion, the deliberate defiance and indulgence in fraudulent activity by the persons –who, being in charge of affairs of AATIPL and ACPL, holding fiduciary duties towards stakeholders, should be dealt with sternly and the penalty in such cases should serve as effective deterrent," says Vijayant Kumar Verma, adjudicating officer (AO) of SEBI in the order.
SEBI has imposed a fine of Rs2.25 crore on AATIPL, and Rs1.25 crore on ACPL. Further, AATIPL, ACPL, Sanjeeva Kumar Sinha, Amita Sinha, and Vandana Sinha are penalised with a fine of Rs25 crore jointly and severally.
Narayan Jee Thakur (Rs25 lakh), Sujeet Kumar Sona (Rs7 lakh), Pawan Mishra (Rs7 lakh) and Abnish Kumar Sudhanshu (Rs15 lakh) are the others penalised by the market regulator.
In its 76-page order, SEBI revealed that from 1 April 2016 to 10 August 2017, the two stockbrokers have sold securities worth Rs130.85 crore belonging to the clients of AATIPL. They also routed and diverted clients' money worth Rs37.69 crore through third parties.
Further, clients' securities worth Rs411.3 crore recorded in the back office books of AATIPL have been found short and routed out of the system by AATIPL by pledging them to non-banking finance companies (NBFCs) and by selling the same from its employees' accounts.
"The clients of AATIPL have suffered huge losses due to the fraudulent act of AATIPL and ACPL and due to the misappropriation of clients' funds and securities and siphoning off of the clients' funds and securities," the order says.
Mr Verma, the SEBI AO, says, "I found that AATIPL used to receive funds in its business account in Axis Bank raised by way of pledging and selling clients' securities. This was done by misusing the power of attorney (PoA) received from its clients to move the securities to its demat account from where the securities were pledged to raise funds. Further, AATIPL had also deposited huge cash during the investigation period. The aforesaid funds were then diverted outside the system by way of transfers to related group/ entities, non-clients, cash withdrawals and paying fixed interest to the clients."
Earlier in August 2017, the National Stock Exchange (NSE) forwarded its preliminary findings of inspection of Amrapali Aadya to SEBI. After that, the market regulator passed an interim order against these nine entities and had barred them from the securities markets. SEBI confirmed these directions in October 2018.