SEBI Orders Four Entities To Halt Offering Unlisted Securities For Public Subscription

Capital markets regulator SEBI on Monday directed four entities to cease and desist from offering unlisted securities for public subscription on their platforms. The entities are AI Growth (owner of altGraaf), Texterity (operator of altGraaf), Purple Petal Invest (owner and operator of Tap Invest) and Berkelium Technologies (owner and operator of Stable Investments).

Tap Invest, altGraaf, and Stable Investments were the three unregistered online platforms to facilitate the sale of privately placed NCDs.

In its interim order, Sebi found the noticees (AI Growth, Texterity, Purple Petal Invest and Berkelium Technologies) are prima facie found to be operating platforms which are facilitating the public issue of NCDs which have been privately placed by the issuers in violation of the Companies Act, 2013, PFUTP regulations and the NCS (Issue and Listing of Non-Convertible Securities) rules.

SEBI noted that these Unregistered Online Platforms (UOPs) have flagrantly violated the regulatory demarcation by making available privately placed unlisted NCDs for public sale.

The regulator observed that from the disclosures made on the altGraaf website the platform, to date, has onboarded 75 companies, and a total amount of more than Rs 4,400 crore has been raised through the platform as of Nov. 18, 2024.

Further, the regulator also said that Tap Invest has onboarded more than 100 companies and more than Rs 400 crore has been raised through the platform as of Nov. 18, 2024.

Investigation is necessary with respect to both these platforms and for stable investments where the data was not readily available, Sebi said in the order.

It is also noteworthy that altGraaf claims to have over 1.86 lakh investors/users, and Tap Invest claims to have over 25,000 investors/users, it added.

"In the present matter, where the demarcation between public and private securities has been consciously blurred, and given the scale of operation of these platforms, the need for regulatory intervention cannot be disputed."

"The distinction between public issues and private placements is not merely procedural but a fundamental safeguard, ensuring that public investments are protected through rigorous oversight," SEBI's whole-time member Ashwani Bhatia said in the order.

Allowing such unauthorised platforms to mushroom and operate unchecked would undermine this critical framework and expose the public to significant risk, Bhatia said.

Accordingly, SEBI directed the noticees will cease and desist from offering securities for public subscription or from being offered for sale on their platforms.

The order came after the regulator found during routine surveillance that certain online platforms were not registered as per norms specified by SEBI and were engaged in solicitation and sale of unlisted non-convertible debentures to retail investors.