Exclusive: Did Anugrah Maintain Two Different Ledgers for Clients and Regulators?
The story of crisis-hit Anugrah Stock and Broking Pvt Ltd is getting murkier day by day. There is now an admission that it was running a Ponzi scheme for many months and it also appears the brokerage may have been maintaining two different ledger accounts, one for its clients and another for regulators.
 
Most clients are unable to match their account balance with the data available with clearing member or regulators. 
 
In a startling revelation, a person associated with Anugrah Stock and Broking, and close to the founder Paresh Kariya, admitted that the firm was running a Ponzi for several years. He made this admission to an officer of a securities law firm started by a top official of SEBI (Securities and Exchange Board of India), that Anugrah had been “camouflaging its losses through fresh money coming in from new investors.” 
 
However, after a sharp fall in the market earlier this year, they could not meet margin calls and Edelweiss Custodial Services Ltd, its clearing broker (at that time), had sold their stocks to meet the shortfall (in line with the rules of National Stock Exchange-NSE). 
 
The bulk of investors in Anugrah, nearly 85% of all clients, have come through an associate firm called Teji Mandi Analytics Pvt Ltd (TMA). The exact relationship between these firms and their financial arrangements are unknown. However, the broking relationship and the power of attorney (POA) signed by all TMA investors are with Anugrah. This means that Anugrah/ TMA has been paying investors and maintaining the pretence of success from early this year by continuing to make payments. 
 
An investor has sent us the chart below of returns paid out by TMA which, indeed, corroborates this claim because it shows that no payments were made in February 2020; there were low returns in March 2020 too.  Even when it was unable to pay investors (barring a few) in June and July 2020, there were apparently no warning bells, right until NSE shut down Anugrah’s derivatives trading on 3rd August. 
 
NSE has also revoked all POA to the broker.  So, barring some shares that are with the Central Depository Services Ltd (CDSL), things look bleak for investors until more information is available from investigators. The more savvy investors have quickly checked their accounts in CDSL—some have found there are no shares anymore and a few others have locked their accounts to prevent whatever is remaining in their account from being transferred out. 
 
   
Direct Borrowings and AR Capital 
 
When Anugrah approached the Securities Appellate Tribunal (SAT) in August after its derivatives business was shut down by the NSE, the Tribunal noted that it has been running an unauthorised derivatives advisory scheme (DAS), which collected over Rs165 crore through an associate firm call Om Shri Sai Investments (OSSI). That scheme, the order noted, was shut in 2019. 
 
It now transpires that Anugrah had persuaded clients to switch to a straightforward loan to the company with the same attractive returns without regulatory hassles. Investors who opted for the conversion have not got their money. Clearly this was used to pay off losses. (Read: Over Rs1,000 Crore at Risk at Anugrah Stockbrokers and Associates?).
 
TMA may have been following the same modus operandi. While it had over Rs800 crore in a depository scheme, which it touted with an elaborate slide presentation and claims to use a sophisticated algorithm, it was also taking direct loans in an associate company called AR Capital. TMA’s partners Anil Gopal Gandhi and Riddhi Kalapi Shah were directors of this firm and it was probably used for proprietary trading. The lenders to AR Capital are also trying to recover their money. 
 
Anugrah Shut Again 
 
Anugrah Stock and Broking, which won a reprieve from SAT on 17th August, was unable to deposit Rs165 crore with the NSE by 1st September. The Exchange had withdrawn its trading rights and also seized its computers and books, the brokerage firm has told investors thronging to its office. 
 
Threats and Fear of Absconding 
 
Investors desperately seeking answers from Anugrah have approached local politicians who stormed the office, issued threats and did some damage. This has also led to fears that the promoters may choose to abscond. One of the partners of TMA is already understood to have left the country.  
 
Allegations against Clearing Members 
 
The role of the two clearing members for Anugrah Stock and Broking is also interesting and confusing. The brokerage has made allegations of unauthorised sales against Edelweiss Custodial Services and claims to have asked NSE for an audit, according to what the promoter informed to an advocate fighting for investors.
 
Edelweiss first told Moneylife that it terminated its relationship with Anugrah as a client in early June after following a due process. However, we now learn that the account actually moved to ICICI Bank only on 20th July. The reason for this wrong claim by Edelweiss is unclear. 
 
However, sources close to Edelweiss also insist that Anugrah Stock and Broking had been hitting losses mark-to-market (M2M) for several months and had been repeatedly cautioned. Also, the account moved to ICICI Bank only after a full and final settlement and receiving all appropriate no objection certificates (NOC) from all parties. 
 
Yet, Anugrah Stock and Broking has been asserting that Edelweiss sold shares rather than invoke the bank guarantee available with it. Was it a defective bank guarantee? Will NSE provide answers and will SEBI ask the right questions? That remains to be seen. 
 
Meanwhile we understand that NSE told ICICI Bank, its new clearing broker, to square off all open positions – over Rs50 crore – which it did. Of these, over Rs30 crore were settled through bank guarantee (of ICICI Bank) while the rest came from sale of shares maintained in margin accounts. 
 
Interestingly, there are no complaints from Anugrah Stock and Broking about this action by ICICI Bank. 
 
Litigation and More 
 
Last week, the Bombay High Court has barred the crisis-hit brokerage from using assets worth Rs58 crore that belongs to more than 25 investors who filed a petition after the firm has stopped responding to them and their accounts have become inaccessible. However, a few hundred more are desperately seeking remedies for multiple exposures to the group. 
 
You may also want to read...
 
 
 
 
 
 
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    mathurgcpta

    3 months ago

    I pray the Hon'ble Supreme Court takes suo moto action and stops any political influences to save the owners of the Anugrah and also not letting them slip out of the country.

    suketu

    3 months ago

    So great we have moneylife who regularly warns people since decades and takes up such big frauds.More power to moneylife.

    johncpune

    3 months ago

    Came to know he is giving audited balance sheet and how come the auditors are signing and 100s of investors are filling returns on what ground there returns are filled by Chartered Accountants. Complete game is of greed.

    Bombay HC Bars Anugrah Stock & Broking from Using Client Assets Worth Rs58 Crore
    The Bombay High Court has barred crisis-hit Anugrah Stock and Broking Pvt Ltd from using assets worth Rs58 crore that belong to more than 25 investors who filed a petition after the firm has stopped responding to them and their accounts have become inaccessible. 
     
    Justice Gautam Patel, in his interim order, has asked the brokerage not to use assets of its investor-clients for its ordinary and usual course of business. It is learnt that advocate Rohaan Cama, representing Anugrah Stock & Broking, offered to disclose all movable, immovable and financial assets of the brokerage firm, along with details of any encumbrance on them. 
     
    Investors were represented by Dr Birendra Saraf of Parinam Law Associates. The claims of each client have been filed as separate cases and their total investment adds up to Rs58 crore. But this is just a fraction of investors who are planning to seek legal help to recover their investment.
     
    Hundreds of investors have lost large sums of money, with one south Mumbai-based family alone having invested over Rs150 crore. So the number of litigants is likely to swell, unless other investors seek other options. 
     
    The bulk of investors in Anugrah have come through an associate firm called Teji Mandi Analytics which was apparently running a derivatives portfolio of over Rs1,000 crore like a Ponzi scheme with assured monthly returns. A director of this firm, Anil Gandhi has been selectively interacting with some clients and assuring them about their money being returned. Investors tell Moneylife that even on Monday night, Mr Gandhi engaged a group of investors on a zoom call that went on from around midnight to 2am. 
     
    He claims to be working with Anugrah to find out the extent of sale of collateral but says that National Stock Exchange (NSE) has taken away “all his computers and data” to his office. The bottom-line is that as of now, none of the investors are sure about the safety of their money. Some investors have been smart enough to access their accounts with CDSL (Central depository of Shares Limited) and lock their share that are still available. Many others have been distressed to find that there are no share in their demand accounts at all. 
     
    Meanwhile the NSE, ICICI Bank, which became the clearing broker for Anugrah in June this year, and the market regulator Securities & Exchange Board of India (SEBI) are all silent. 
     
    As reported by Moneylife, last month, the Securities Appellate Tribunal (SAT) had given a reprieve to Anugrah Stock & Broking against action from NSE. However, SAT had asked the brokerage to deposit Rs165 crore with the NSE within two weeks, while granting three weeks to file a response. 
     
    NSE discovered that Anugrah was running an unauthorised derivatives advisory service (DAS) through an associate firm called Om Shri Sai Investments (OSSI) since 2017. The service was shut down in 2019. It had collected Rs165.10 crore from investors. NSE issued a show-cause notice on 17th July and asked Anugrah to respond by 27th July. A day before the deadline ended, the brokerage firm asked for more time. However, on 3 August 2020, NSE shut down Anugrah’s trading rights in all derivatives segments, including futures, options, commodities and currency. Anugrah Stock & Broking then rushed to the SAT. 
     
    However, as per a news report, during the hearing before Bombay HC, Dr Saraf contended that "NSE had barred Anugrah from running a derivative trade advisory service but the SAT stayed that order subject to the company depositing Rs165 crore with it within two weeks...that deadline ended on Monday but Anugrah was yet to make the payment."
     
    Mr Cama, representing the brokerage, however, rebutted the claims saying that Anugrah Stock & Broking will file a detailed response to the petitions. 
     
    You may also want to read...
     
     
     
     
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    djrish

    2 months ago

    furthermore karvy is still charging DP charges and other charges inspite of being non operational, this is heights of investors being taken for ride, there are no employees to respond.
    kary as rta should be banned.

    karvy wealth management is marketing as if they did nothing at all

    very sad state and sebi is sleeping like a pig.

    INDITER

    3 months ago

    After the scrupulous events, silence is golden for Financial Institutions and Regulatory Bodies.

    mail4ashwani

    3 months ago

    All Anugrah promotors must be behind bars immediately otherwise investors may not get their money back.Karvy promotes are also roaming free that's why they are not not releasing investors' shares
    from pool account after so many months.

    Here Are the New Rules, Charges for Financial Transactions Applicable from 1st July
    Several changes have kicked in from 1 July 2020 for financial transactions that will directly impact consumers at all levels. This includes limiting number of free transactions at automated teller machines (ATMs) and paying stamp duty on purchases of mutual fund units. 
     
    Other changes include provident fund (PF) rules, Atal Pension Yojana, registration in Kisan Samman Nidhi and penalty for not maintaining minimum balance for savings account in banks, among others.
     
    In March, finance minister (FM) Nirmala Sitharaman had announced a waiver on charges for three months till 30th June on ATM transactions, no penalty for minimum balance in savings account while halting auto debit for pension scheme. In addition, the government had allowed withdrawal from PF account and extended the Sabka Saath Sabka Vikas tax benefit scheme till 30th June. 
     
    Investors will also have to pay stamp duty on purchasing mutual funds from 1st July. Even if you are investing in mutual funds through systematic investment plan (SIP) and systematic transfer plan (STP), you still have to pay stamp duty.
     
    However, investors will not have to pay stamp duty on the withdrawal of mutual funds. This stamp duty will be levied on all types of mutual funds. The effect of stamp duty will be seen most on debt funds.
     
    Purchase of mutual funds will attract stamp duty at 0.005%. Apart from this, transfer of units of mutual funds from demat account will attract stamp duty of 0.015%. The imposition of stamp duty will affect the holding of 90 days and less.
     
    In view of the scarcity of cash with the people, the finance ministry had provided emergency withdrawal facility from the EPF and the last day of application is on 30th June. Shareholders could withdraw an amount which was less than thrice the basic salary and dearness allowance or 75% of the total deposit amount.
     
    In addition, the bank ATM cash withdrawal rules are changed from 1st July and all transaction except first few or limited by the banks, would be charged. During lock-down, norms for cash withdrawals from a bank ATM were relaxed but are now going to be tightened. The relaxation was announced for three months—April, May, June—and the deadline ended on 30th June. If there is no extension announced, then the old ATM withdrawal rules will get reinstated.
     
    From 1st July, ATM transactions would become expensive for all SBI customers.
     
    Also, from July, the rule of no minimum balance in the savings account will end. If the minimum balance is not maintained by the account-holder in the accounts, the bank will charge a penalty on it. 
     
    At present, the limit for keeping a minimum balance in a savings account varies for metro city, semi-urban and rural areas and is different for different banks. A minimum balance of Rs3,000 is required in metro cities, Rs2,000 in semi-urban areas and Rs1,000 in rural areas on the accounts of State Bank of India (SBI). At the same time, this amount in HDFC Bank is Rs10,000, Rs5,000 and Rs2,500 respectively.
     
    The Central government has relaxed rules to withdraw money from the Employees' Pension Fund (EPF) during the lock-down imposed for the prevention of coronavirus.
     
    From 1st July, auto debit of monthly contribution will start from Atal Pension Yojana accounts.
     
    The Pension Fund Regulatory and Development Authority (PFRDA) had, in April, directed banks to stop the auto debit of Atal Pension Yojana till 30th June. Now from today, auto debit facility will be started once again.
     
    Most of the subscribers under this scheme are from the lower strata of the society and have been facing severe crunch due to the lockdown. A recent PFRDA notification stated that the penalty interest will not be levied if the subscriber's pension scheme account is regularised before 30th September.
     
    The last date for payment of the Sabka Biswas Yojana, introduced for resolution of old pending disputed matters related to service tax and central excise, was 30th June and this scheme cannot be availed from Wednesday.
     
    The government has made it clear that it will not extend this scheme beyond 30 June 2020.
     
    In this context, the Central Board of Indirect Taxes and Customs (CBIC) had given information, in a tweet, that 0.19 million declarations of Rs90,000 crore have been filed under this scheme. If this is not paid by 30 June 2020, they will not get benefits.
     
    Under the Prime Minister Kisan Samman Nidhi Yojana, Rs6,000 is given to the farmers in three installments of Rs2,000 every year. So far five installments have been sent to the farmers. Registration for the scheme has now ended on 30th June.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    mahesh.bhatt

    5 months ago

    Pass the messy costs created by Bank Managers & Advisors & Samanj sevaks to Samaj Easy Management Policy Take it easy sab chalta hai Wholesale Volumes businesses pe Retail's commission n margins Profiteering policies ? Like Poor Reliance Retail & Futre group defaulting wholesalers will serve Aam Aadmi as Kirana Mom Pop shops loot aam aadmi? In short short shocks aam aadmi? Mahesh Bhatt

    ajadhav42

    5 months ago

    Each & every Bank & financial Institutions should have notice paper on their doors to inform & act on the excessive or regular charges imposed by Banks in line with Ministry of Finance. They should not hastle any customers for these charges.

    kvrao42004

    5 months ago

    When there are many changes under the laundry list, it will go unnoticed. You will know only through your account where the shoe pinches.

    BR

    5 months ago

    Like it is not possible to find out what strain of Corona virus is in each place, it is not easy to know if Tapeworm or Extra Terrrestrial is in FinMin.

    tillan2k

    5 months ago

    Govt financial virus is worse than coRONA virus

    Ramesh Popat

    5 months ago

    looting accelerates!

    BR

    5 months ago

    Ever since a Tapeworm or Extra Terrrestrial entered Finance Ministry as it has eaten & will still eat all our heads.

    suketu

    5 months ago

    Modi govt killing the mutual fund industry which is already half dead.Now people wl avoid Mfunds even more and put money in blue chips.

    groupstonath

    5 months ago

    Many a time when we try to get cash from ATM we find that there is no cash. These banks which charge such exorbitant charges must be asked to pay say Rs. 250/- when they are unable to fulfill their duty which is to provide cash. This amount is to be credited to the account holders account.

    REPLY

    bpugazhendhi

    In Reply to groupstonath 5 months ago

    Yes! In such situations we are forced to access other bank ATMs which will attract fee from our account. It is double punishment for the account holders. Banks should be made to pay for denial of cash at ATMs. Charges cannot be one way!

    groupstonath

    In Reply to bpugazhendhi 5 months ago

    I have a doubt. Do these banks treat our attempt to get cash when there is no cash in the ATM as one out of 5 attempts allowed over and above which they have said they will charge extra? That would be like rubbing salt on a wound!

    yerramr

    5 months ago

    Financial inclusion will be moving to financial exclusion window. The reach of services will be not only costly but will also be distant.

    rs235m

    5 months ago

    Banks should pay fixed deposit interest on minimum balance amount or should not insist on mon bal. There should not be one sided rule.Instead of paying penalty ,close the account.

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 4 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone