When an RA Runs a Scheme: Lessons from SEBI's Shares Bazaar Adjudication Order

SEBI has imposed penalties totalling ₹20 lakh on Shares Bazaar Pvt. Ltd., a SEBI-registered Research Analyst, and four of its directors and CEOs. The reason: the RA ran an assured-return "PMS-style" scheme it had no licence to run.

The adjudication order (Order No. ORDER/MS/KS/2026-27/32738-32742) was passed on September 29, 2026 by Adjudicating Officer Medha Sonparote. It covers the period March 16, 2021 to December 16, 2022, and it began with a reference from NSE in July 2022.

This case matters to every RA for one simple reason. Your registration lets you do one thing: research. The moment money, returns or portfolios enter the picture, you are outside your licence, and SEBI will hold the company, its directors and its senior management responsible.

Part 1: The Violations

SEBI found that Shares Bazaar (SBPL), while registered only as a Research Analyst (INH200010001), collected money from the public under a scheme called "Making Millions Financially Free" (MMFF). Here is what the record showed.

1. An assured-return scheme dressed up as PMS

MMFF offered three plans with "fixed dividends" of 18%, 30% and 48% a year, with 100% capital declared "secure". Investors were told their money would go into the equity market and a portfolio would be built for them. One draft agreement, signed by the then CEO, described SBPL's business as "Portfolio Management Services" and "Short term Investments", and promised monthly payouts of 4% irrespective of profit or loss.

SEBI found no evidence that any investor money was actually invested in securities.

2. A website that kept selling PMS after SEBI's warning

The website carried a PMS login page and claims like having 2,500+ PMS clients. SBPL said a developer had accidentally put a test site on a live server. SEBI did not accept this, because:

•         SBPL gave no details or documents on how the error happened or who was responsible.

•         PMS content was still online on May 20, 2022 and September 12, 2022, well after SEBI's advisory of March 17, 2022.

•         SBPL had given SEBI written undertakings (March 28 and September 26, 2022) that it offered no unregistered services, yet fund collection continued at least till December 16, 2022.

3. The bank trail told its own story

One ICICI account showed about ₹72.66 crore of credits and ₹72.41 crore of debits during the period. Entries were labelled "PMS", "Dividend" (3,681 debits, ₹6.27 crore) and "Referral" (378 debits, ₹51.75 lakh). About ₹13.81 crore went from SBPL to Kisaan Parivar Pvt. Ltd., a group company whose founder and MD is SBPL director Bhupal Nanavath.

SEBI read this as new investor money paying earlier investors, with referral payouts showing a multi-level marketing pattern.

4. A defence that arrived too late

SBPL argued the money was raised through Compulsorily Convertible Debentures (CCDs) placed privately with 198 investors, and that "dividend" and "referral" really meant interest and principal repayment. The AO rejected this:

•         The board resolution produced was dated October 6, 2023, and the one CCD certificate was dated December 20, 2022. Both fall outside the examination period.

•         No Companies Act filings for a private placement (PAS-4, MGT-14, return of allotment) were produced.

•         The AO concluded the CCD story was an afterthought, raised once SEBI started proceedings.

5. "It was the ex-CEO's idea" did not help

The company blamed its former CEO, T. L. V. Ramesh, who admitted designing MMFF in anticipation of a PMS licence. SEBI noted the scheme ran under SBPL's name, accounts and infrastructure, and continued after he left in March 2022. The police complaint SBPL filed against him was about data theft, not unauthorised fund collection, so it did not support the company's story.

Provisions violated

Noticee	Provisions violated
Shares Bazaar Pvt. Ltd.	Reg. 13(i) and 24(2) read with Clauses 1 (honesty and good faith) and 2 (diligence) of the Third Schedule, RA Regulations 2014; Clause 3(a) of Schedule II and Reg. 16 read with Clause I(1.2) of Schedule III, Intermediaries Regulations 2008
Directors and CEOs (Noticees 2 to 5)	Clause 8 (responsibility of senior management) of the Third Schedule, RA Regulations 2014, read with Section 27(1) of the SEBI Act

Part 2: The Action

The AO imposed ₹20 lakh in total: ₹10 lakh on the company under Section 15EB, and ₹10 lakh across four individuals under Section 15HB. Penalties must be paid within 45 days, failing which SEBI may start recovery under Section 28A, including attachment of property.

Noticee	Role	Section	Penalty
Shares Bazaar Pvt. Ltd.	Research Analyst	15EB	₹10,00,000
Bhupal Nanavath	Director	15HB	₹3,00,000
Prasanna Lakshmi Atluri	Director	15HB	₹3,00,000
Tirumala Lakshmi Venkata Ramesh	Ex-CEO	15HB	₹3,00,000
Naresh Mitta	CEO (from March 2022)	15HB	₹1,00,000

Key rulings along the way

•         Res judicata rejected. SBPL argued that its pending SAT appeals against the cancellation of its stock-broker and AIF registrations barred this case. The AO held that registration cancellation is an enforcement action, while penalty adjudication under Chapter VI-A is a separate proceeding.

•         Silence counts against you. The ex-CEO never replied or appeared despite several opportunities. The AO proceeded ex-parte, relying on SAT's ruling in Sanjay Kumar Tayal that such noticees are presumed to admit the charges.

•         Intent is irrelevant. Relying on SEBI v. Shriram Mutual Fund, the AO held that a penalty follows once a breach is proved, whether or not it was deliberate. "Technical and inadvertent error" was no defence.

•         A "probationary" CEO is still a CEO. Naresh Mitta argued his role was interim, with no signing or executive powers. He still received a penalty, though the lowest one.

How the AO weighed the penalty

The AO could not isolate the exact unfair gain because funds were mixed with the group company, but noted that over ₹72.66 crore was mobilised. As aggravating factors, SBPL already faced an AIF restraint order (February and October 2024) and cancellation of its broker registration (July 2024). As a mitigating factor, no investor complaint of non-return of principal was on record.

Part 3: Checklist for Research Analysts

Use this list to check that your practice stays inside the RA licence. Each point maps to a mistake SEBI found in this case.

Stay within your registration

1. RA only prepare research, give buy/sell/hold recommendations, price targets or opinions on public offers, as defined in Reg. 2(u) of the RA Regulations.

2. RA never accept client money for investing, managing or "deploying" on the client's behalf.

3. RA never promise assured, fixed or guaranteed returns, or say capital is "secure" or "protected".

4. RA do not launch or pre-sell any product for a licence we have applied for but not yet received (PMS, IA, AIF or broking).

Keep your public face clean

1. Website, app, social media and WhatsApp content is reviewed before going live, and staging sites are password-protected or blocked from public view.

2. No page uses words like PMS, portfolio login, fixed dividend, assured returns or capital guarantee unless we hold that registration.

3. RA run a periodic check of our live site and archived copies (such as the Wayback Machine) for outdated or non-compliant content.

Watch your bank account

1. Our bank account receives only research fees, matching invoices and signed client agreements.

2. Transaction narrations are reviewed; entries like "PMS", "dividend" or "referral" are red flags to investigate at once.

3. No referral or incentive payouts that reward clients for bringing in other clients.

4. Transfers to group or related companies are documented, board-approved and never funded by client money.

Paper everything, on time

1. Every client signs an agreement and completes KYC before any fee is accepted.

2. Any fund-raising by the company (debentures, loans, equity) is completed with board resolutions and Companies Act filings (PAS-4, MGT-14, PAS-3) on the date it happens, not later.

3. When SEBI or an exchange writes to us, we act fully and keep evidence of every corrective step (screenshots, takedown logs, emails).

4. Every undertaking given to SEBI is tracked, and someone is accountable for honouring it.

Senior management owns compliance

1. Directors and CEO receive a regular compliance report covering website content, fee receipts and client complaints.

2. Board minutes record review and approval of any new product or service before launch.

3. When a KMP exits, the board reviews and shuts down any initiatives they ran; "it was the ex-CEO's scheme" is not a defence.

4. New or interim CEOs and directors are briefed on open regulatory matters from day one; a probationary title does not reduce liability.

Respond to every notice

1. Every SCN gets a timely written reply backed by documents, not just denials.

2. RA attend every hearing, in person or through an authorised representative. Not responding lets the AO proceed ex-parte and treat the charges as admitted.

The Bottom Line

The ₹20 lakh in penalties is only part of the cost. Shares Bazaar had already lost its broking registration, faced an AIF restraint, and saw its directors and CEOs penalised personally. Most of it traces back to one decision: collecting money for a service it was not registered to offer, and then not stopping when SEBI warned it.

If you are unsure whether something on your website, in your bank statement or in your product plans crosses the line, it is far cheaper to check now than to explain it in an SCN reply later.

Compliancify Consulting helps SEBI-registered Research Analysts and Investment Advisers stay audit-ready, from website and marketing reviews to annual compliance audits and SCN replies. Reach us at compliancifyconsulting.com or +91 98735 70047.

This article summarises a public SEBI adjudication order for educational purposes and is not legal advice.