SEBI finds Shares Bazaar ran Ponzi scheme with 18-48% assured returns

This order addresses SEBI's adjudication of Shares Bazaar Pvt. Ltd. (SBPL) and its directors/CEOs for allegedly operating an unauthorized assured-return scheme called 'Making Millions Financially Free' (MMFF) while registered as a Research Analyst, rather than as a Portfolio Management Service (PMS). SEBI examined whether the entity and its officers violated regulations regarding honesty, good faith, and proper conduct.

Who it concerns: Shares Bazaar Private Limited (Noticee 1), Bhupal Nanavath (Director, Noticee 2), Prasanna Lakshmi Atluri (Director, Noticee 3), Naresh Mitta (Current CEO, Noticee 4), and Tirumala Lakshmi Venkata Ramesh (Ex-CEO, Noticee 5).

What SEBI found or ordered

• SEBI alleged that SBPL operated a Ponzi/MLM scheme (MMFF) offering assured returns of 18% to 48% p.a. while registered as a Research Analyst.
• SEBI found that investor funds were used to pay earlier investors, make dividend/referral payments, and transfer money to a group entity (Kisaan Parivar Pvt. Ltd.).
• SEBI noted bank account activity of approximately ₹72.66 crore in credits and ₹72.41 crore in debits.
• SEBI alleged violations of the SEBI (Research Analysts) Regulations, 2014, and SEBI (Intermediaries) Regulations, 2008.
• The order proceeds ex-parte against Noticee 5 (Tirumala Lakshmi Venkata Ramesh) as they did not respond to notices or avail hearing opportunities.
• Noticees 1-4 denied allegations, claiming MMFF was an unauthorized initiative by the former CEO and that funds were raised via Compulsorily Convertible Redeemable Debentures (CCDs).

Also in the document

• The inspection period covered March 16, 2021, to December 16, 2022.
• The former CEO (Noticee 5) reportedly admitted to developing the MMFF scheme.
• The case involves cross-entity fund transfers to Kisaan Parivar Pvt. Ltd. (KPPL), associated with director Bhupal Nanavath.
• The order is an adjudication proceeding under Section 15-I of the SEBI Act, 1992.