SEBI Bars Merchant Banker Corporate Capital Ventures From Taking New Assignments Over Compliance Lapses

The Securities and Exchange Board of India (SEBI) has imposed a one-month restriction on merchant banker Corporate Capital Ventures Private Limited following an inspection that found multiple compliance lapses. The issues included disclosures made to the regulator, investor information and office-location details.

The review covered several areas of the firm's regulatory compliance, including merchant banking rules, ICDR regulations, PFUTP norms, intermediary regulations, certification requirements and insider trading regulations. SEBI also examined compliance with related circulars.

What Did SEBI Find During Its Inspection Of Corporate Capital Ventures?

The issues were spread across the firm's disclosures, certifications and internal compliance processes. SEBI raised concerns over the way Corporate Capital Ventures maintained and reported some of this information.

A designated authority held the merchant banker responsible for six violations. These covered the initial public offering (IPO) track record, NISM certification requirements, information given about an earlier inspection, investor charter and complaints disclosures, a failure to respond to a test email, office-location disclosures, and shortcomings in due diligence and record-keeping.

The authority recommended a one-month restriction on taking new assignments.

Why Were The IPO Track Record And NISM Certifications Flagged?

During the inspection, SEBI found that Corporate Capital Ventures had not updated details of IPOs handled by the firm, including Rudrabhishek Enterprises and Rajnandani Metal, on its website.

The regulator had raised a similar issue during an earlier inspection, following which it issued a deficiency letter in February 2020. Corporate Capital Ventures cited disruption caused by Covid. SEBI accepted that the pandemic had affected operations but said the firm had enough time to correct the issue after business resumed in July 2021.

The NISM certification issue involved key management personnel. Kulbhushan Parashar's earlier certificate expired on 13 December 2019. He obtained the required Merchant Banking certification on 27 April 2023.

Harpreet Parashar, who became a whole-time director on 31 March 2021, was required to obtain the relevant certifications within one year. SEBI said these were obtained only in 2023.

What Did Corporate Capital Ventures Tell SEBI About The Lapses?

Corporate Capital Ventures denied any intentional wrongdoing. The firm said several of the deficiencies were technical or resulted from operational difficulties after the Covid period.

It told SEBI that the business had been disrupted, its earlier team had been replaced and the identified issues were subsequently addressed. The firm said it had updated the IPO track records, uploaded the investor charter and complaint details, and obtained the required NISM certifications after the inspection.

SEBI also examined information provided by the firm about an earlier inspection covering April 2018 to September 2019. Corporate Capital Ventures had told the regulator that there were no adverse findings and no observation letter from that inspection.

SEBI said a deficiency letter dated 11 February 2020 had in fact been issued. The firm called the omission a human error. The regulator, however, said the lapse showed carelessness and a lack of diligence.

The restriction on new assignments will remain in force for one month from the date of SEBI's order, passed by Whole Time Member Amarjeet Singh.

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