SEBI found that MBK Business had raised funds from thousands of investors through issue of secured redeemable debentures-SRDs

Continuing its crack down on illegal fund raising activities, market regulator Securities and Exchange Board of India (SEBI) has barred Kolkata-based MBK Business Development from raising funds from public through issue of securities. SEBI also prohibited the company and its three directors Prafulla Kumar Kundu, Saikat Roy and Anshuman Ghosh from accessing markets.

SEBI found that MBK had raised funds from thousands of investors through issue of secured redeemable debentures (SRD) and as a result of such activity had "prima facie" violated regulatory norms.

SEBI noted that MBK's debenture issue was made to over 50 persons which under the rules made it a public issue and therefore attract the requirement of compulsory listing before a recognized stock exchange as well a filing of a prospectus, which the company failed to do.

"Protecting the interests of investors is the foremost mandate for SEBI and therefore, steps have to be taken in the instant matter to ensure only legitimate fund raising activities are carried on by MBK and no investors are defrauded," the market regulator said in an order today.

Accordingly, SEBI has ordered MBK to "not mobilise funds from investors through the Offer of SRDs or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions".

Besides, the company and its three directors are barred from issuing any offer document or advertisement for soliciting money from the public for the issue of securities.

"MBK and its directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions," SEBI said.

SEBI has also asked the entities not to dispose any of the properties or assets acquired by that company through the issue of SRDs, without prior permission from the regulator, as well as not to divert the funds raised from public.

It has also asked the company and its directors to provide a full inventory of all its assets and properties.

MBK has been directed by SEBI to furnish complete and relevant information within 21 days.

Moreover, SEBI has "prohibited" trustees of Secured Debentures Trust of MBK Business Development India Ltd and from continuing with its present assignment as a debenture trustee in respect of the SRDs issue of the company and also from taking up any new assignment or involvement in any new issue of debentures, till further orders.

SEBI said that the trustees had acted as unregistered debenture trustee which was in violation of the norms.

The market regulator had begun its probe after receiving a request early last year to look into fund raising activity of MBK.