Monarch Networth Capital settles Sebi case over stock brokers' rule breach

Monarch Networth Capital Ltd on Friday settled with markets regulator Sebi a case pertaining to alleged violation of stock brokers' rule after paying Rs 11.37 lakh towards settlement amount.

This came after the entity approached Sebi proposing to settle the pending proceedings "without admitting or denying the findings of fact and conclusions of law" through a settlement order.

The stock broker remitted Rs 11.37 lakh and accordingly "the instant proceedings initiated against the applicant (Monarch Networth Capital) vide show cause notice (SCN) dated June 27, 2024, are disposed of ".

The Securities and Exchange Board of India (Sebi) had conducted an investigation into the trading activities in the scrip of Atlantaa Ltd during the period August 1, 2022 to November 23, 2022.

The investigation was conducted to ascertain whether or not there was any violation of the provisions of Sebi Act 1992 and the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.

Following the investigation, an SCN was served on certain entities including Monarch Networth. The SCN alleged that certain entities (excluding the applicant) had colluded and engaged in a coordinated scheme to induce investors to acquire securities in the scrip of Atlantaa Ltd by uploading false and misleading videos on certain YouTube channels.

Further, some of these entities had bought shares at a lower price and subsequently sold a substantial portion of their holdings at inflated prices, thereby making unlawful gains at the cost of new investors.

The applicant was the stock broker through which the alleged fraudulent trades were carried out by three entities, connected to the applicant. The applicant was also alleged to have not carried out necessary due diligence and to have not complied with the statutory requirements while dealing with clients.

By indulging in such activities, it was alleged that the applicant had violated Code of Conduct specified in the stock brokers' rule.