Operating through a website, MCXBizSolutions.Com, it claimed to be active in stock trading and commodities trading and "was soliciting and collecting money from public and was promising high returns," Sebi said.
Directing the company and its sole proprietor Syed Sadaq, Sebi said that the registration certificate being used by them to lure investors was never issued by Sebi to the concerned entity. This certificate is shown to have been issued by Sebi under signature of Meera Kulkarni in June 2013, whereas there was no such officer in Sebi as on that date.
On its website, MCX Biz Solutions (MBS) also mentioned "Welcome to MCXSX", apparently without any link with MCX-SX, a stock exchange set up by Financial Technologies India Ltd (FTIL) group that also runs leading commodity bourse MCX.
Among other claims, MCX Biz Solutions said "mcxbizsolutions is a great trading arena for making profits, for everybody, and its fun" and it is "a winning system for making money" and "We know all about MCX commodity or stock tips for trading and earnings."
A Mumbai address listed on the website was also found to be untrue, while they also "made representations and statements in their website about their activities in securities market in reckless and careless manner and have suggested facts which are false and untrue," Sebi said.
"By their acts and omissions including their false statements and representations in deceitful manner, they have fraudulently solicited, enticed and induced investors to deal in securities," the regulator said.
In its order, Sebi said MCX Biz Solutions and its proprietor have been restrained from accessing the securities market and further prohibited them from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner till further directions.
Besides, they have also been asked to "cease and desist from undertaking any activity in the securities market, directly or indirectly, in any manner whatsoever till further directions," Sebi said.
Sebi has also asked them to immediately withdraw and remove all advertisements, representations, literature, brochures, materials, publications, documents and websites in relation to any activity in the securities market.
MCX Biz Solutions and Syed Sadaq have also been prohibited from mobilising funds from the public, in whatever form, till further directions; and to keep the entire money collected by them from the investors forthwith in an escrow account opened with any nationalised bank and file a report with Sebi in this regard within 7 days.
Indicating further action in this matter, Sebi also asked MBS and its proprietor to file their objections, if any, within 21 days.
A copy of the order has been forwarded to Ministry of Commerce and Industry, Forward Markets Commission, Enforcement Directorate and the Government of Andhra Pradesh for appropriate action, if any.
MCX Biz Solutions has also displayed a Certificate of Recognition purportedly issued to it by Joint Director General of Foreign Trade, the Ministry of Commerce and Industry, recognising it to be a 'One Star Export House'.
It also claimed to be an affiliate of Bonanza Promotional Ltd, portraying it to be registered with Sebi as a stock broker with a Sebi registration and NSE membership. However, this registration number was in fact issued by Sebi to some other entity, which had surrendered the same in 2011 itself.
Sebi said it has never granted any certificate of registration to any entity by the name Bonanza Promotional Limited to act as a stock broker.
MCX Biz Solutions has also listed a Malaysia address on its website, which also carries a message mentioning that the site will be closed due to a technology upgradation problem, but the problem will be rectified soon and the investment amount and profits would be returned to investors.
After coming across the claims made by MCX Biz Solutions, Sebi began its probe and sought clarifications from MBS in August through emails sent to five email addresses mentioned on the website.
Sebi also sent letters to the Mumbai address listed on the website, but the said letter was returned undelivered with remark "the entity not there".
MBS did not respond to emails sent by Sebi, but it removed the sub-broker registration certificate number from its website after Sebi sought clarifications.
Sebi also found Malaysia address to be "non-existent" and it was later found that MCX Biz Solutions was operating from Hyderabad and its sole proprietor was Syed Sadaq. It was also maintaining two bank accounts in Hyderabad and Sebi found from the concerned banks (Axis Bank and SBI) that these current accounts were opened in July 2013 itself.
On perusal of statements of these two accounts, it was observed that 17 investors had deposited their funds in the Axis Bank account of MCX Biz Solutions (account balance as on August 27, 2013 being about Rs 3.57 lakh) and 10 investors had deposited their funds in the SBI account of MBS (about Rs 1.43 lakh as on August 28, 2013).
Sebi said that MCX Biz Solutions displayed "a fake and forged certificate of registration claiming itself to be registered with Sebi as a sub-broker. MBS and its sole proprietor also made "known misrepresentations by making fraudulent and deceitful claims regarding registration with Sebi."
"They have also made representations and statements in their website about their activities in securities market in reckless and careless manner and have suggested facts which are false and untrue," the regulator said, while adding that they were running a "fraudulent" and "illegal" scheme.