Arihant Capital Settle Case With Sebi, Pays Rs 17 Lakh As Settlement Charge

Arihant Capital Markets has settled with Sebi a case pertaining to alleged violation of broker and intermediaries norms.

Arihant Capital Markets paid over Rs 17 lakh as settlement charges to the regulator.

The order came after Arihant Capital proposed to settle the instant proceedings initiated against it, "without admitting or denying the findings of facts and conclusions of law".

"The instant proceedings initiated against noticee vide show cause notice dated October 06, 2022 is disposed of," Sebi's Executive Director Anand R Baiwar said in the settlement order passed on Wednesday.

Sebi initiated enquiry proceedings against noticee (Arihant Capital) for alleged violation of the broker regulations and intermediaries norms for failing to file suspicious transaction reports to Financial Intelligence Unit- India, regarding certain discrepancies noted by the noticee in the Know Your Customer (KYC) documents of its clients.

Thereafter, the regulator had conducted an investigation from September 2009 to March 2013 and found that shares of 14 companies were acquired in the names of 26 bogus and non-existing entities through transfer of counterfeit physical shares and subsequent demat of these shares in the accounts of these bogus entities.

The same was facilitated by an individual -- Arvind Babulal Goyal -- and his associates. Through an order passed in March 2021, Sebi directed Goyal to disgorge the ill-gotten gains made by him and also debarred Goyal and his associates from the securities market.

Further, two of the clients' of Arihant Capital had off-market dealings with those 26 non-existing entities and had traded through them.

These clients had received shares of Global Securities (one of the 14 companies whose shares were fraudulently transferred and demated) and the same were sold in the market through the noticee, the regulator said.

It was also noted that the trades of these clients were not in parity with their declared annual income.

Thereafter, a show cause notice was issued on October 06, 2022 for the alleged violation of regulatory norms.

The settlement application was filed before Sebi on February 9, 2023 and the High Powered Advisory Committee of the regulator on February 22, 2023, recommended that the case be settled upon payment of the settlement charges.

After Arihant Capital paid the respective amount of Rs 17.50 lakh, Sebi issued the settlement order.

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