Sebi bars SecUR Credentials, managing director for alleged fund diversion

The Securities and Exchange Board of India (Sebi) on Thursday debarred background check company SecUR Credentials and its managing director Rahul Belwalkar from the securities market, the latest in its actions against Small and Medium Enterprises (SMEs) found to be violating norms.

SecUR was first listed with NSE Emerge, the SME platform by the National Stock Exchange (NSE), and was later migrated to the mainboard of both exchanges in October 2022.

Belwalkar has not only been restricted from buying and selling in the securities market until further orders, but the Sebi order also bars him from holding directorship in any listed company. The market regulator has alleged the diversion of the company’s funds to the promoter, directors including independent directors, and other entities by the MD.

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The company’s promoters also offloaded their significant shareholding between February 2022 and April 2022, when the stock price saw an over 235 per cent surge. This offload is also being investigated by the market watchdog. By the end of September 2022, the promoters had no stake in the company.

Sebi’s interim order follows its previous order on Varanium Cloud which was found to have misutilised funds raised through its initial public offering (IPO). One of the companies with which Varanium was found to have made fictitious purchases was SecUR Credentials.

Belwalkar had also transferred Rs 8.23 crore to the MD of Varanium.

“The company and its MD have also adopted a cavalier approach while seeking to ensure compliance with fair and accurate disclosure requirements as is evident from the non–disclosure of the outstanding balance in respect of the unsecured loan availed from its MD, accurate disclosure of the status of its Rights Issue,” said Sebi.