Sebi bars 2 Kolkata operators over illegal operations

The Securities and Exchange Board of India (Sebi) has expelled two local operators, Sanjeev Kapoor and Rajeev Kapoor, from the stock market with immediate effect for illegally accepting loans and deposits intended for investments in the stock market.

In two separate orders today, the market regulator said the entities would be given a hearing on receipt of request. Till date, the ban on them and their firms, namely Max Portfolios and Delta Alliance Financial Services, would continue.

Both the city-based operators allegedly formulated a scheme that tried to misuse the loopholes in the system.

Both firms created a system under which they invited deposits from the public and collected public funds, a function under the purview of the Reserve Bank of India (RBI).

The firms then routed the money through a share broker, and claimed that the entire chain was outside the purview of both RBI and Sebi as it combined two completely different functions.

They had managed to fool many small investors into depositing money after issuing advertisements promising secured and high returns.

These types of operators managed to avoid attention of the regulators in the past. This time, however, Sebi launched its crackdown promptly saying that any transaction in the share market came directly under its supervision.

Lyons Range sources said the two operators managed to collect funds in excess of Rs 50 lakh in a short span.

Sebi sources, however, declined to reveal the amount of money involved.Sebi said the entities had fraudulent intention to misuse investors' money.

Their intention was "highly detrimental to the interests of investors and securities market," Sebi said.

Max Portfolios and Delta Alliance Financial were collecting public money on assurance of returns as high as 100 per cent for investments in share market without having any authorised locus standi.

Sebi has come across certain advertisements published in the newspaper by both the entities. Delta Alliance Financial, which was engaged in portfolio management without Sebi's permission, advised investors to open NSE accounts and authorise Delta to execute transactions of buy and sell of securities on their behalf.