SEBI Penalises Shares Bazaar and Four Executives ₹20 Lakh Over Unauthorised Assured-Return Scheme

Capital markets regulator Securities and Exchange Board of India (SEBI) has imposed an aggregate penalty of ₹20 lakh on Hyderabad-based Shares Bazaar Private Limited (SBPL) and four of its key executives for violating intermediary norms and running an unauthorised assured-return investment scheme.

The enforcement action followed an extensive examination initiated after the National Stock Exchange of India (NSE) forwarded a reference regarding the company's activities. SEBI scrutinised the entity's operations between March 16, 2021, and December 16, 2022.

Breakdown of the Penalties

In its adjudication order, the market watchdog distributed the ₹20 lakh fine across the company and key managerial personnel:

• Shares Bazaar Pvt Ltd: ₹10 lakh
• Bhupal Nanavath (Director): ₹3 lakh
• Tirumala Lakshmi Venkata Ramesh (Former CEO): ₹3 lakh
• Prasanna Lakshmi Atluri (Director): ₹3 lakh
• Naresh Mitta (Current CEO): ₹1 lakh

Anatomy of the Assured-Return Scheme

SEBI's probe revealed that SBPL—which held registration as a research analyst and later sought registrations as a stockbroker and an alternative investment fund (AIF)—operated an unregistered scheme named "Making Millions Financially Free" (MMFF).

Under the MMFF programme, investors were promised annual fixed returns ranging between 18% and 48%, coupled with assurances of 100% capital protection. Marketing materials and agreements created the impression that investor funds were deployed directly into the securities market under portfolio management arrangements.

However, regulatory scrutiny of the company’s bank accounts revealed no evidence that the mobilised funds were invested in the capital markets.

Key Financial Findings from Bank Scrutiny:

• A primary ICICI Bank account operated by SBPL recorded 3,451 credit entries totalling ₹72.66 crore during the period.
• Debit entries in the same account stood at 6,686, amounting to ₹72.41 crore.
• Approximately ₹13.81 crore was transferred from SBPL to Kisaan Parivar Pvt Ltd (KPPL), an affiliate entity linked to director Bhupal Nanavath, while ₹3.35 crore moved in reverse.
• Bank records featured transaction narrations such as "PMS", "dividend", and "referral", pointing to payouts made to existing investors rather than genuine market-linked yields.

Regulatory Rejections and Past Actions

The noticees claimed that the MMFF programme was launched without board authorization by the former CEO and argued that capital was raised through privately placed compulsorily convertible debentures. They also maintained that portfolio management services (PMS) references on their website were hosted inadvertently.

SEBI rejected these arguments, noting that the content remained accessible online even after regulator-issued advisories in March 2022, while fund mobilisations continued through December 2022. The regulator also observed that the company’s stockbroker registration had previously been cancelled in July 2024, following restrictions imposed on its AIF arm in February 2024.

SEBI held the noticees in breach of the Intermediaries Regulations and Research Analysts Regulations, reiterating that registered market entities cannot market unregulated schemes or offer assured returns on market instruments.

Tags: SEBI Shares Bazaar NSE Portfolio Management Services Capital Markets