Sebi declines further relief to Jai Annanya Investments

The Securities and Exchange Board of India (Sebi) has declined to provide any further interim relief to Jai Annanya Investments in the case related to tax evasion and money laundering through illiquid stock options contracts.

Rejecting the company's plea for further relief in order to repay loan worth Rs 40 crore to an unconnected entity Adventz Finance, the regulator said the claim that they were unconnected is false.

"The material provided by these entities and data as available on Exchange/ depositories /MCA (Ministry of Corporate Affairs) websites, it is noted that the claim of Adventz that it is unconnected to Jai Annanya is false," Sebi Whole Time Member Rajeev Kumar Agarwal said.

Adventz Finance had claimed that it had advanced Rs 40 crore to Jai Annanya and that allowing the latter to utilise only 25 per cent of the portfolio value was insufficient to recover the outstanding dues.

The regulator said Jai Annanya had already been allowed relief in February this year to sell the securities lying in its demat account and keep the sale proceeds in an interest bearing account and utilise the proceeds for investment, business purposes.

"I am not convinced to accede to the requests of Adventz Finance and Jai Annanya Investments and their representations with regard to additional interim relief as aforesaid are disposed of accordingly," Agarwal said.

Among others, Jai Annanya has raised an objection that the entities who have booked profits or losses lesser than Rs 5 crore have not been debarred and are carrying on with such trading activity.

"In this regard, I deem it important to mention that the interim order clearly mentions that detailed investigation in the matter is in progress. The fact that certain entities have been left out of the interim order does not signify that they are outside the scope of Sebi's investigation or have been exonerated," he said.

"At the stage of the interim order, directions were issued against entities considering their role/involvement in the scheme and the impact on the securities market as observed at this stage. I, therefore, am not inclined to agree with contention of Jai Annanya in this regard," he added.

The Sebi, via an interim order dated August 20, last year had prohibited 59 entities, including Jai Annanya from securities markets and had also referred the case to the Income Tax Department for further investigations.

"Jai Annanya has failed to give any plausible reason/explanation for complete removal of restraint at this stage. I, therefore, do not agree for complete removal of restraint imposed by the interim order," he said.

However, Sebi has allowed Jai Annanya to continue its Non-Banking Financial Company (NBFC) business and allowed it to open new account tagged as 'client margin account', create pledge on client securities for the purpose of giving them loan, sell clients' securities from 'client margin account' on account of default by the client to pay the margin money.

These relaxation are subject to several restriction like proprietary dealing would not be made from 'client margin account', sale of client's shares from the the account would be under the supervision of the stock exchange/ depository.

Besides, Sebi said that Jai Annanya can approach the regulator for removal of any genuine difficulties for running its NBFC activity.