SEBI asks altGraaf, Tap Invest and Stable Investments to cease and desist from selling bonds

The SEBI order noted that altGraaf claims to have over 1.86 lac investors/users and Tap Invest claims to have over 25,000 investors/users.

The market regulator has asked three unregistered online bond platforms to cease and desist from offering securities for public subscription or from enabling offer-for-sale.

The altGraaf website says that it has onboarded 75 companies and has helped raise more than Rs. 4,400 crore of November 18, 2024; and Tap Invest's platform says that it has onboarded more than 100 companies and has helped raise more than Rs. 400 Crore through the platform as of November 18, 2024. Stable Investments' data was not readily available.

Through an interim order passed on November 18, the Securities and Exchange Board of India (SEBI) issued these instructions to the owner (AI Growth Private Limited) and operator (Texterity Private Limited) of the platform altGraaf; owner and operator (Purple Petal Invest Private Limited) of the platform Tap Invest; and owner and operator (Berkelium Technologies Private Limited) of the platform Stable Investments. The SEBI order noted that altGraaf claims to have over 1.86 lac investors/users and Tap Invest claims to have over 25,000 investors/users.

According to the order, the operators of these platforms were subscribing to private placement of non-convertible debentures (NCDs) and then selling these NCDs down to the public through the platforms.

SEBI's order recorded the need to act urgently in this matter: "Allowing such unauthorized platforms to mushroom and operate unchecked would undermine this critical framework and expose the public to significant risk. Therefore, in order to preserve the integrity of the financial markets and prevent further investors from being exposed to such unregulated platforms, interim ex-parte directions are warranted."

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Background

The order stated these entities were found to be "operating platforms which are facilitating the public issue of NCDs (non-convertible debentures) which have been privately placed by the issuers in violation of the Companies Act, 2013, SEBI Act, 1992, the PFUTP Regulations and the NCS Regulations."

The order also said that further investigation is needed into whether these were done with the connivance of the issuing companies.

The order said, "The norms governing public issues, which as the term suggests, impose stricter disclosure and compliance requirements as compared to those applicable to private placements. Such norms are intended to safeguard the interests of the investors. These include the requirement to obtain credit ratings and appoint registered intermediaries like merchant bankers, debenture trustee, etc. In contrast, private placements can be offered to a limited and pre-identified set of investors, not exceeding two hundred in a financial year. This fundamental distinction ensures that the less stringent requirements of private placements do not expose the wider public to risk."

It added, "In this case, the UOPs (unregistered online platforms) have flagrantly violated this regulatory demarcation by making available privately placed unlisted NCDs for public sale"