Market regulator SEBI has imposed a fine of ₹90 lakh on Mumbai-based Anugrah Stock Broking for misusing client funds and making incorrect reporting to stock exchanges. More than 70 investors have approached the Bombay High Court alleging that Anugrah had indulged in “illicit and unauthorised transactions”, causing them heavy financial losses. The regulator has failed to assess the illegal profits made by Anugrah or loss caused to investors.

The Securities and Exchange Board of India (SEBI) has said in its order that no quantifiable figures are available to assess the disproportionate gain or unfair advantage made by Anugrah as a result of the defaults. It has concluded that from the material available on record, it may not be possible to ascertain the exact monetary loss to the investors/clients on account of default by Anugrah.

SEBI said that it had observed that there are no investor complaints on record arising out of failure of Anugrah. But since there were violations of securities market laws, SEBI has imposed a fine on Anugrah.

Investor complaints

Anugrah Securities is a Mumbai-based brokerage founded by Paresh Kariya and is a trading member of NSE . Kariya was arrested by Mumbai police for defrauding investors.

Teji Mandi Analytics, the sub-broker of Anugrah, had come up with an algorithm-based trading system a few years ago , promising that the shares lying in their demat accounts can be used for derivative trading.

But investors have told the court that Anugrah and Teji Mandi started placing client securities in the brokerage pool accounts and used it for leverage purposes to execute their own trades. Also, most trades executed by Anugrah or Teji Mandi were illegal since they were not pre-authorised by the demat account holders and were misusing the Power of Attorney. Investors have also alleged that margin statements and contract notes issued against the executed trades were false and had no correlation with actual trades or did not reflect the true position of the client securities. Anugrah handed over the securities to Edelweiss’ clearing function, which failed to verify the actual ownership and sold them off.

Related Topics