Capital market regulator SEBI debarred two stock broking firms and their directors from dealing in securities for allegedly indulging in borrowing of securities from gullible investors through misrepresentation and fictitious means.
In an interim order, SEBI directed the entities - Mega Millennium Investment (MMI), Mega Millennium Securities (MMS), Swaminathan Mahalingam and Pradipta Chatterjee - not to buy, sell or deal in securities in any manner either for themselves or for their clients.

The order was passed after investigation on complaints that the entities paid irregular returns against securities borrowed by them, SEBI said.

"It appears that the directors of MMS used the securities for their proprietary trading rather than lending to others. There may be similar agreements entered into with various clients and in this way they have misappropriated clients securities by misleading them," the regulator said.

"It is felt that in order to prevent further harm to the investors and securities market, appropriate preventive action is required to be taken immediately against MMS, MMI and their directors," it said.

MMS is registered with SEBI as a sub-broker of Bombay Stock Exchange and National Stock Exchange, while MMI is registered as a stock broker of Inter-connected Stock Exchange of India and sub-broker of NSE and BSE.

The watchdog said the entities could appeal to SEBI against the order within 30 days.

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