Sebi orders four online bond platforms to cease operations

Synopsis

These entities include AI Growth and Texterity - owner and operator of altGraaf, Purple Petal Invest, which owns Tap Invest, and Berkelium Technologies, which operates Stable Investments.

Mumbai: The Securities and Exchange Board of India (Sebi) has directed four online bond platform providers to cease and desist from offering securities for public subscription and from being offered for sale on their platforms after it found them operating without registering with stock exchanges.

These entities include AI Growth and Texterity - owner and operator of altGraaf, Purple Petal Invest, which owns Tap Invest, and Berkelium Technologies, which operates Stable Investments.

Rules mandate entities operating as online bond platform providers to be registered as a stock broker in the debt segment of a stock exchange.

However, Sebi during routine surveillance found that certain online platforms which were not registered were engaged in solicitation and sale of unlisted NCDs (non- convertible debentures) to retail investors.

It found that as of October 23, 2024, these platforms were making available for sale to public the unlisted NCDs which were privately placed by the issuers. Such down-selling of privately-placed unlisted NCDs to the public has the characteristics of a public issue under the Companies Act, Sebi said.

As per rules, private placements can be offered to a limited and preidentified set of investors, not exceeding two hundred in a financial year.

“These platforms appear to have structured their offerings in a manner to avoid regulatory scrutiny,” Sebi whole-time member Ashwani Bhatia said in his order. Sebi’s examination prima facie revealed that the modus operandi adopted by these platforms involved making available unlisted NCDs issued via private placements on their platform for sale to the general public. In most of the instances, it was noted that the operators of the platforms were allotted securities directly by the issuers. The securities, so allotted, were warehoused by the operators and sold to general public, the regulator said.

“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,” Bhatia said.

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

As of November 18, altGraaf has onboarded 75 companies and over Rs 4,400 crore has been raised through the platform. While Tap Invest has onboarded above 100 companies and over Rs 400 crore has been raised through the platform.

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