Sebi Confirms Market Ban on SecUR Credentials and MD for Alleged Fund Diversion

The Securities and Exchange Board of India (Sebi) has announced that SecUR Credentials and its Managing Director, Rahul Belwalkar, will continue to be barred from the securities markets due to alleged fund diversion. SecUR Credentials, listed on both BSE and NSE, transitioned from the SME platform to the mainboard in October 2022.

Representative image

Interim Order and Confirmatory Decision

In June, Sebi issued an interim order restricting SecUR Credentials and Belwalkar from participating in the securities markets. The regulator also prohibited Belwalkar from serving as a director of any listed company or any Sebi-registered intermediary. Sebi's whole-time member Ashwani Bhatia confirmed these directions in a recent order, stating, "I hereby confirm the directions issued vide the interim order dated June 13, 2024."

Examination Period and Findings

Sebi conducted a suo moto examination of SecUR Credentials' activities from April 2020 to March 2024. The investigation aimed to determine if there were any breaches of the Prohibition of Fraudulent and Unfair Trade Practices and disclosure rules. The interim order highlighted prima facie evidence of fund diversion by Belwalkar to promoters, directors, and other entities, violating these norms.

Opportunities for Defence

Following the interim order, Sebi provided ample opportunities for SecUR Credentials and Belwalkar to present their case in line with natural justice principles. However, they failed to utilise these opportunities effectively. Consequently, Sebi found no reason to alter the interim directions.

Related Party Transactions

The investigation also revealed that related party transactions were conducted by SecUR with its MD without obtaining necessary shareholder approval. This was a breach of disclosure norms. Additionally, Belwalkar was found to have transferred Rs 8.23 crore to Varanium Cloud MD Harshwardhan Sabale.

Sebi's actions underscore its commitment to maintaining market integrity by addressing violations promptly and ensuring compliance with regulatory standards.