Teji Mandi Analytics-Anugrah Stock & Broking: A Ponzi Scheme in Derivatives?
Three firms led by Anugrah Stock & Broking Ltd and its associates Teji Mandi Analytics Pvt Ltd and Om Shri Sai Investments may have been running what appears to be a Ponzi scheme in derivatives, based on assuring steady monthly returns of anywhere between 1% and 1.3 % or or over 19% annually.
 
This had helped them amass well over Rs1,000 crore, but the number may be significantly higher and probably allowed them to hide mark-to-market losses for several months, because fresh investment and borrowings kept coming in even after the coronavirus (COVID-19) lock-down. 
 
Over a dozen investors, who have written to us, have investments of over Rs1 crore, while one south-Mumbai family alone has over Rs150 crore. All are trying to figure out what happened and how to recover their money since they can no longer access their account and view holdings. 
 
On 27th August, Moneylife’s exclusive report first disclosed that over Rs1,000 crore of investors’ money may be at risk. Teji Mandi Analytics, an associate,  was the main route to raising funds. Teji Mandi Analytics then sent out an email pinning the blame on the clearing member, without naming it.
 
Moneylife published those details on 28th August.  But that is neither the whole story and not entirely correct either. 
 
Modus Operandi 
 
According to a chartered accountant (CA), activist and investment adviser, some of his clients had also invested with Teji Mandi Analytics (TMA), but on examining their books, he discovered that the firm fudged both higher returns as well as losses and made an average payment of 1.25% per month (the exact payment every month would vary to create the illusion of differing monthly returns). Mark-to-market (M2M) losses were never disclosed to investors. When it earned higher profits it could offset these losses. Also, as long as new investors kept coming in, there was never an issue about providing returns. He says he persuaded one of his clients to withdraw funds on noticing the problem, but a few others were tempted by the high returns to stay on.
 
The firm has apparently been fudging M2M losses for several months, probably by using money invested by new clients. An inspection by the National Stock Exchange (NSE) may have finally stopped the music. NSE discovered the unauthorised derivatives advisory scheme of Rs165 crore in an associate firm called Om Shri Siddhi Investments (OSSI) and shut off Anugrah’s derivatives business after which things unravelled rapidly.  
 
The Securities Appellate Tribunal (SAT) ruling on 17th August did not help since the broker has to deposit Rs165 crore with NSE in two weeks, which will end shortly. This is unlikely to happen. An investor, who called us, says that her family has also extended a ‘loan’ of over Rs1 crore to OSSI, which has not been repaid and the firm has gone incommunicado since 27th August. 
 
Blaming the Clearing Member
 
Investors of Anugrah and Teji Mandi Analytics have been told that wrongful selling by the clearing member is at the root of their problems. An email from Anil Gandhi, director of TMA, has claimed that “the Clearing Member made ‘unnecessary and wrongful deductions’ from some accounts by selling their stocks.” 
 
Although he has attached a sample sheet of  49 accounts to show that sale of stocks from client accounts were far in excess of trading losses, he also admitted that such sales may be in hundreds of crores and that they were seeking the help of 'eminent securities lawyers' to fight the 'illegal and wrongful sale of clients’ stocks' on behalf of investors. 
 
The clearing member, according to what was told to investors, was Edelweiss Custodial Services. This is also not true. Anugrah’s relationship with Edelweiss Custodial Services was terminated a few months ago and it is understood to have moved to ICICI Bank. So any selling on behalf of Anugrah in recent times would have been by ICICI Bank. 
 
The transfer of a large clearing account can only happen after full reconciliation of accounts and after a no-objection-certificate (NOC) is provided by the transferring entity. Investors need to understand the role of the clearing member and know that there will be no selective sales in specific accounts. In fact, the clearing member does not know TMA and its clients; it is Anugrah alone that is the client. So some tough questions need to be asked by investors. 
 
Under stock exchange regulations, the clearing member’s job is to facilitate proper risk-management by the clearing house. This means, if a trading member is unable to meet its financial obligations within a stipulated time, the clearing member has to liquidate collateral to recover dues. Sales proceeds are then credited to the trading member’s ledger. 
 
Importantly, the clearing member does not derive any benefit or incentive by wrongly selling or liquidating shares. In fact, it stands to lose clients. So no sale is undertaken without informing the broker about the shortfall or delay in meeting obligations on every occasion and the collateral is liquidated only after this. 
 
Since investors have signed a comprehensive power of attorney (POA) with Anugrah and TMA, it is naturally their shares, mutual fund units or cash that would be used to pay M2M losses. So, how long has Anugrah been losing money? Is there no way for the NSE to alert investors when this happens?
 
Ironically, from Tuesday, shares belonging to investors will need to be pledged to the broker and will remain in investors' acocunts. So, presumably, when there are M2M sales by the broker, investors will receive immediate alerts from the depository and can take check their losses by closing accounts.  
 
But this does not help investors who have already lost money. Unless the accounts are quickly reconciled, there is no way of knowing the extent of losses or the total amount raised and managed by Anugrah and its connected entities. More importantly, will be money that remains, if any, be equitably distributed among investors? 
 
Also, if the broker is declared a defaulter, how many of these transactions – especially in derivatives – will be eligible for a compensation of Rs25 lakh each from NSE’s investor protection fund? Since all the action was in derivatives, there may be more bad news on the way. 
 
The best course of action for investors now is to get together and turn into a strong force to be able to demand quick answers from the regulator, the stock exchange and the intermediaries involved. Neither Anugrah nor TMA have responded to several emails sent by Moneylife; we will update this story with information, if they do. 
 
You may also want to read…
 
 
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    xxxxxx

    4 months ago

    bad news to be alert

    suketu

    4 months ago

    My ex CA one Vidyut Shah told me on 1 Aug 2018 that my billing was too little and I shd increase my billing to cotinue CA services meaning ,among other things,transfer my stock account to his broker who would sell my stocks and pocket the money.I dumped him like a garbage can and parted with him imm.P be careful.fraud CA's are around the corner everywhere.In the guise of CA they are hard core extortionists wanted to rob yr shares money like Anugrah has done.

    REPLY

    s5rwav

    In Reply to suketu 4 months ago

    Excellent 😄😄

    suketu

    In Reply to s5rwav 4 months ago

    The same CA also told me in2018 that "given me all yr money .This way you will save 33% Income tax.".Result I dumped him like waste paper garbage.This speaks for himself what profession he really is in.Beware.Chores and extortionist criminals in form of some CA's in Mumbai.

    swarke

    4 months ago

    Do you also recollect Wasankar of Nagpur ??
    My humble request to Ms. Sucheta & Mr. Basu not to please share stage with people like those.

    kpushkar

    4 months ago

    I wonder who is the mastermind here.. the investors also have to accept the greed and risk associated with such return..
    no free lunch!!

    ajeya

    4 months ago

    Looks like NSE is not efficient, they should develop AI to give alerts to investors as and when they spot problem. It is all mathematical and informational, why can't they do it?

    s5rwav

    5 months ago

    Will the Main Brain behind the Ponzi Scheme be Allowed by Mrs #NirmalaSitharaman the Finance Minister of India to Escape to UK or Any Other Safe Country Never to Return like Other Financial Fraudsters who Brazenly Looted Thousands of Crores of Indians and Enjoy Good Life Outside India? I am Babubhai Vaghela from Ahmedabad. Thanks.

    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
    28 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)