SEBI Orders Four Entities To Cease Public Offering Of Unlisted Securities

The Securities and Exchange Board of India (SEBI) has issued a “cease and desist” order against three unregistered online bond platforms, directing them to stop offering unlisted securities for public subscription. The entities behind the platforms are altGraaf (operated by AI Growth Private and Texterity Private), Purple Petal Invest (owner of Tap Invest), and Berkelium Technologies (operator of Stable Investments). Despite there being four entities involved, the order specifically targets three platforms, including those connected to altGraaf.

SEBI noted that the platforms were not properly registered with stock exchanges, which violated laws requiring online bond platform providers (OBPPs) to register as debt stock brokers.

During its regular surveillance, SEBI observed that these platforms were helping retail investors purchase unlisted non-convertible debentures (NCDs). These NCDs were first issued in violation of the established thresholds for private placements. Under the Companies Act, private placements must be limited to no more than 200 investors in a financial year, and the securities must be allotted to pre-identified investors only.

According to SEBI, the platforms in question lacked sufficient safeguards to protect investors and failed to meet the necessary regulatory checks. Some of the platforms had sold these privately placed NCDs to the public, which SEBI noted appeared to be structured to avoid regulatory scrutiny.

Ashwani Bhatia, SEBI’s whole-time member, emphasized, “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 unauthorized platforms to proliferate unchecked would undermine this critical framework and expose the public to significant risk.”

SEBI reported that altGraaf has raised over Rs 4,400 crore through its platform, onboarding approximately 75 companies and attracting around 186,000 investors. While Tap Invest has raised Rs 400 crore and onboarded more than 100 companies. The investigation into these platforms is on going and SEBI has given them 21 days to file their responses to the order.

By ensuring that only registered companies function within the regulatory framework, SEBI is demonstrating its commitment to safeguarding public investors from the possible dangers connected with unregulated platforms.