Sebi bars BRH Wealth Kreators, 7 others from securities market

Clamping down on irregularities, Sebi on Monday barred stock broker BRH Wealth Kreators and seven entities, including three individuals, from the securities market till further directions. BRH Wealth Kreators Ltd was formerly known as BMA Wealth Creators Ltd.

Besides BRH Wealth, Shiv Kumar Damani, Anubhav Bhatter, Murgesh Devashrayi, BRH Commodities Pvt Ltd -- formerly BMA Commodities Pvt Ltd -- Prosperous Vyapaar Pvt Ltd, PoloSetco Tie Up Pvt Ltd and Parton Commercial Pvt Ltd have also been restrained from accessing the securities market. In September, the regulator received an e-mail from the NSE about significant mismatches and inconsistencies in the balances reported by BMA. A shortfall of around Rs 100 crore worth of client securities was observed as compared to the actual records and BMA, in its communication to the exchange, had attributed the shortfall to software issue.

"NSE had further observed that out of the securities that were short, securities worth more than Rs 60 crore were prima facie used for meeting the pay in obligation of certain related clients indicating possible misappropriation of client securities. "NSE stated that BMA has not provided any satisfactory explanation with regard to the shortfall and BMA has maintained the stance that the shortfall is due to software issue," Sebi said in the order.

On October 4, the bourse forwarded a report of its preliminary observations of BMA to Sebi and it was observed that the entity prima facie failed to comply with Sebi regulations. These entities have been "prohibited from buying, selling or otherwise dealing in securities, either directly or indirectly, or being associated with the securities market in any manner whatsoever, till further directions", an 18-page order said.

Among other directions, the watchdog has asked exchanges, clearing corporations and depositories to appoint forensic auditor to track misuse of client's funds/securities and to identify the net assets/liabilities of BRH Wealth and BRH Commodities. A report in this regard has to be submitted to Sebi within 90 days. "The observations in this order does not ipso facto entitle any client of the trading member to claim their funds, stocks and securities, which claims are to be taken by such clients with the concerned stock exchanges/depositories in accordance with their respective bye-laws," Sebi Whole Time Member Ananta Barua said in the order.

The entities have been 21 days time to file their objections, if any, to the order.

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