Quick Facts
Overview
The Securities and Exchange Board of India (SEBI) imposed a penalty of ₹1,00,000 on Capital Finance and Investments LLP for violating Section 11C(5) of the SEBI Act, 1992.
The firm failed to appear personally before the Investigating Authority despite multiple summonses during an investigation into trading activities in the scrip of Sigma Solve Limited, hindering the probe into potential violations of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.
Details of the Case
SEBI initiated an investigation into suspicious trading in Sigma Solve Limited's scrip to check for PFUTP violations. Capital Finance and Investments LLP was identified as a suspected entity connected to the "Delhi Group entities," with large fund transactions involving Kulbhushan Parashar and call records linking it to Manish Kumar.
To examine its role, SEBI's Investigating Authority issued three summonses requiring personal appearance for examination on oath. The firm repeatedly failed to comply, citing medical issues with one partner, and instead requested questionnaires via email.
Despite accommodations, including rescheduling and venue changes, the firm did not appear, leading to adjudication proceedings. The Adjudicating Officer found the non-appearance deliberate and without reasonable cause, as the firm ignored the third summons after a one-month recovery period. This non-cooperation impeded establishing connections with other entities and Sigma's management.
WORKED EXAMPLES
Initial ESDC Review Findings
SEBI issued the initial summons for appearance on November 20, 2024, in Mumbai, served via email. The venue was changed to Delhi on November 22, 2024. On the day, the firm emailed about a sudden medical emergency (typhoid fever and jaundice for partner Sumit Kumar) without evidence, requesting questions instead.
Firm's Internal Review Results
Summons required appearance on December 9, 2024, served via email and SPAD (returned undelivered). The firm responded on December 7, 2024, citing ongoing illness and office closure, again requesting questions.
Back-Office Process Deficiency
Final summons for December 23, 2024, noted prior health issues and provided time post-recovery. Served via email on December 11, 2024; no response or appearance.
Remediation for Recent Misses
Firm requested document inspection on June 2, 2025, post-SCN; SEBI responded on June 17, 2025, that the relied-upon documents were provided. The firm sought an extension and replied on July 1, 2025.
- Applied via promoter RBC to Canada Education Savings Program (CESP).
- Impact: Directly restored funds to client RESP accounts.
Fines and Penalties
Key Quotes
"Personal appearance of the Noticee was crucial part of investigation process owing to the aforesaid connection with Mr. Kulbhushan Parashar (and suspicious fund transactions with him) and with Mr. Manish Kumar." (From the Adjudication Order)
"Without prejudice to the provisions of any other law for the time being in force, without reasonable cause, if you fail to or refuse to appear at the given date & time... SEBI may initiate Adjudication proceedings against you." (From the summons recitals)
Sources
