Description

SEBI adjudication order against Fourdegreewater Services Private Limited and its directors for violations during inspection as Online Bond Platform Provider (OBPP) for the period July 25, 2023 to June 30, 2024.

Summary

SEBI issued Adjudication Order No. Order/JS/DP/2025-26/31791-31795 against Fourdegreewater Services Private Limited (PAN: AAFCF2028P) and its four directors/key managerial persons - Mr. Anshul Gupta, Mr. Shashank Chimaladari, Ms. Ankita Shastri, and Mr. Aditya Anand - following an inspection of the company’s operations as a stock broker acting as an Online Bond Platform Provider (OBPP). The inspection covered the period from July 25, 2023 (date of OBPP approval) to June 30, 2024 and found multiple violations of SEBI regulations.

Key Points

  • Inspection conducted of Fourdegreewater Services Private Limited in its capacity as OBPP stock broker
  • Inspection period: July 25, 2023 to June 30, 2024
  • Four directors and Key Managerial Persons held responsible for day-to-day affairs during inspection period
  • SEBI communicated inspection findings via letter dated October 01, 2024
  • Noticee submitted comments/explanations on October 15, 2024
  • SEBI found explanations unsatisfactory and initiated adjudication proceedings
  • Adjudicating Officer appointed to handle the matter

Regulatory Violations

The following violations were identified during inspection:

  1. Regulation 51A(2) of SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021

  2. Clause A(2) of Code of Conduct - Provided under Schedule II read with regulation 9(f) of SEBI (Stock Brokers) Regulations, 1992

  3. Clause 3.4.1 of Annexure-XXI-A - Read with clause 5.2.1 of Chapter XXI of SEBI NCS Master Circular No. SEBI/HO/DDHS/PoD1/P/CIR/2023/119 dated August 10, 2021 (updated as on July 07, 2023)

  4. Clause 2.1 of SEBI Circular - No. SEBI/HO/DDHS/POD1/P/CIR/2023/194 dated December 28, 2023

  5. Clause 3.4.1 of Annexure-XXI-A - Read with clause 5.2.1 of Chapter XXI of SEBI Master Circular No. SEBI/HO/DDHS/PoD1/P/CIR/2024/54 dated May 22, 2024

Compliance Requirements

  • Stock brokers acting as Online Bond Platform Providers must comply with SEBI (Stock Brokers) Regulations, 1992
  • OBPPs must adhere to regulation 51A of SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
  • Stock brokers must follow the Code of Conduct prescribed under Schedule II
  • Compliance with SEBI Master Circulars and specific circulars related to NCS and OBPP operations is mandatory
  • Directors and Key Managerial Persons are responsible for ensuring regulatory compliance in day-to-day operations

Important Dates

  • July 25, 2023: Date from which Fourdegreewater Services was eligible to act as OBPP (inspection period start)
  • June 30, 2024: End of inspection period
  • October 01, 2024: SEBI communicated inspection findings to the noticee
  • October 15, 2024: Noticee submitted comments/explanations on findings
  • August 10, 2021 (updated July 07, 2023): Master Circular SEBI/HO/DDHS/PoD1/P/CIR/2023/119
  • December 28, 2023: SEBI Circular No. SEBI/HO/DDHS/POD1/P/CIR/2023/194
  • May 22, 2024: Master Circular No. SEBI/HO/DDHS/PoD1/P/CIR/2024/54

Impact Assessment

Market Impact: Limited direct market impact as this concerns one specific stock broker, but serves as important precedent for OBPP compliance standards.

Operational Impact: The entity Fourdegreewater Services Private Limited and its directors face adjudication proceedings which may result in penalties. This order reinforces accountability of both the corporate entity and individual directors/KMPs.

Industry Impact: This adjudication order sends a strong compliance message to all stock brokers operating as Online Bond Platform Providers regarding strict adherence to:

  • Stock Broker Regulations
  • NCS Regulations specific to OBPP operations
  • Code of Conduct requirements
  • Master Circular provisions

Regulatory Precedent: Demonstrates SEBI’s active monitoring and enforcement approach for the relatively new OBPP framework, establishing that both entities and their key personnel will be held accountable for violations. Other OBPPs should review their compliance frameworks to ensure adherence to all applicable regulations and circulars.

Impact Justification

Adjudication order against specific stock broker for regulatory violations. Medium importance as it affects one entity and sets precedent for OBPP compliance requirements. Medium impact limited to the specific broker and serves as warning to other OBPPs.