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As Supreme Court decisions loom, a legal assault is weakening SEC's power

LivemintLivemint · 1y ago
As Supreme Court decisions loom, a legal assault is weakening SEC's power
Medial

A legal attack on the U.S. Securities and Exchange Commission (SEC) is eroding its ability to regulate Wall Street, with the Supreme Court expected to issue two rulings that could further limit its powers. The recent overturning of a major SEC rule on oversight of private funds by a U.S. appeals court is seen as a blow to SEC Chair Gary Gensler's efforts to increase transparency and clamp down on conflicts of interest. The ruling could also expose other SEC draft rules to legal challenges. Conservative-leaning courts have been used by business groups to challenge SEC rules and enforcement actions, part of a broader assault on federal agencies known as the "war on the administrative state". Gensler's aggressive agenda has made the SEC a prime target, as it oversees a wide range of entities with significant financial stakes. The agency is currently facing several lawsuits from financial firms and trade groups, accusing it of exceeding its authority and imposing burdensome regulations. Critics argue that weakening the SEC will harm ordinary Americans, while the industry says it is merely defending its profits. Despite the challenges, Gensler stated that the agency would adjust and adapt to adverse court rulings. The current litigation often alleges violations of the Administrative Procedure Act, which requires regulators to justify rules and consider public feedback. The Supreme Court is also expected to rule on two cases that could have significant implications for the SEC, one relating to its use of in-house judges for enforcement actions and the other challenging the "Chevron deference" doctrine, which requires judges to defer to federal agencies' interpretations of ambiguous laws. Both rulings could further curtail the SEC's authority and impact its ability to enforce regulations.

Ecommerce enabler GoKwik says proliferation of fake orders rising online

Economic TimesEconomic Times · 1y ago
Ecommerce enabler GoKwik says proliferation of fake orders rising online
Medial

Ecommerce enabler GoKwik has reported an increase in the number of fake orders placed on ecommerce platforms, which is impacting the cost of operations for companies. They have observed that 2-10% of total orders, and in some cases even up to 15-20%, are fraudulent. However, GoKwik's return to origin risk intelligence and fraud prevention mechanisms have enabled them to intervene and protect merchants. The company is concerned that the actual number of affected brands in the overall ecosystem beyond their network will be significantly higher. GoKwik offers solutions to predict customer behavior and prevent undelivered orders, known as return to origin (RTO), which can cause logistical and financial challenges for ecommerce brands. Through their network intelligence, they are able to detect 80% of all fake orders and are continuously implementing measures to enhance fraud prevention.

Exclusive: ReshaMandi faces complete layoffs, website shutdown, and auditor red flag

EntrackrEntrackr · 11m ago
Exclusive: ReshaMandi faces complete layoffs, website shutdown, and auditor red flag
Medial

The road for ReshaMandi appears to have come to an end as the firm has laid off its entire workforce, sources close to the firm told Entrackr. Significantly, the Creation Investments-backed firm’s website has been down for the past week, coinciding with the resignation of its auditor. “It’s all over for ReshaMandi,” said one of the sources requesting anonymity. “The company is struggling to pay liabilities and bear operational costs including salaries for the past several months.” Team Entrackr has also been trying to access its website since Wednesday last week but it’s not working until the press time. ReshaMandi has been embroiled in corporate governance issues including revenue inflation and fake invoices among others. A few alarming issues were also highlighted by its auditor Walker Chandiok & Co LLP which also resigned last month, the regulatory filing accessed from the Registrar of Companies (RoC) shows. The auditor stated that Saurabh Kumar Agarwal, the CTO, and founder, acknowledged the firm’s financial struggles, including downsizing operations, reducing staff, and the inability to support the audit firm’s efforts to complete the financial statements for FY23. Filings reveal that ReshaMandi owes Rs 14.16 lakh to the auditing firm for services offered. Meanwhile, the Bengaluru-based company also appointed a new auditor Suresh Kapoor & Associates in late July. ReshaMandi also saw back to back resignations of its chief financial officers (CFO). In April 2023, the firm appointed former KPMG CFO Samadrita Chakravarty as its group CFO who took over Ritesh Kumar. Kumar served as CFO between March 2022 to January 2023. As per an Inc42 report, Chakravarty also quit the firm in October last year. Commenting on Entrackr’s queries, a ReshaMandi spokesperson said, “ReshaMandi is facing some financial difficulties and has streamlined its staff, operations and processes to focus on collecting its pending receivables from the market. We continue to believe in coming out of this situation strong and be able to get back on track soon.” The company’s co-founder Mayank Tiwari chose not to address the specific question about the layoffs. ReshaMandi has raised more than $50 million including a $30 million Series A round in October 2021. In June 2022, it also initiated a new funding round and raised a $6.2 million debt in November 2022. The firm’s investors include Creation Investments, Omnivore, 9 Unicorns, Venture Catalysts, Northern Arc, Innoven Capital, and Stride Ventures. As per media reports, it was reportedly in talks to raise $5 million at much lower valuation to clear the long pending salaries of employees. However, the deal did not materialize. For a firm that claimed to be on course for Rs 1,900 crore in gross revenues in FY23, the fall is certainly a surprise, however skeptical many in the market might have been about its numbers. It does seem to be a case of flying too high for a better valuation, only to be burnt by the reality of its operating market and poor processes for Reshamandi. For any startup chasing growth only for the next round of funding and higher valuation, this is a perennial existential risk, when a potential investor (Temasek in this case) decides to move back or wait it out. Even though some might say that the whole drive for the next round and valuations is frequently driven by investors themselves. Temasek has clearly seen something that convinced it to take a break even if that might mean curtains for ReshaMandi.

Startups face regulatory heat as ED probes deepen in 2025

EntrackrEntrackr · 9d ago
Startups face regulatory heat as ED probes deepen in 2025
Medial

Startups face regulatory heat as ED probes deepen in 2025 India’s Enforcement Directorate (ED) has intensified its scrutiny of startups in 2025, launching a series of investigations across various sectors, including gaming, fintech, and e-commerce. What started as a few separate investigations has now turned into a larger crackdown, putting a spotlight on how some of India’s top-funded startups follow rules around foreign investment, business structure, and overall compliance. One of the most high-profile targets this year has been opinion trading platform Probo, which came under the ED scanner in July. The agency conducted searches across multiple locations and seized assets worth Rs 284.5 crore, alleging that Probo’s model, where users trade on real-world outcomes, amounts to illegal betting and violates the Prevention of Money Laundering Act (PMLA). While the company has denied any wrongdoing and assured full cooperation with the authorities, on July 15, the Punjab & Haryana High Court heard Probo’s plea to quash the FIR and unfreeze its bank accounts. Though the court declined interim relief, it asked the state to respond regarding partial unfreezing. The matter is now listed for the next hearing on August 26. After the ED intervention, the case has become part of a broader debate over how such platforms are classified and regulated in India’s evolving legal landscape. Around the same time, Myntra, the fashion platform owned by Flipkart, became the subject of a fresh FEMA complaint filed by the ED. The case revolves around alleged misuse of FDI norms to the tune of Rs 1,654 crore. According to the ED, Myntra operated under the wholesale cash-and-carry model, which is eligible for 100% FDI through the automatic route, but was effectively engaged in multi-brand retail by routing goods through a group entity, Vector E-Commerce. According to this structure, ED claims that it has violated caps on intra-group sales and circumvented retail FDI restrictions. The complaint has been placed before the adjudicating authority in Bengaluru. Another startup in the ED’s crosshairs is Simpl, a buy-now-pay-later (BNPL) platform operated by One Sigma Technologies. The agency has alleged FDI violations worth Rs 913 crore, stating that the company misclassified its operations as IT services to raise foreign capital under the automatic route—when in fact, its activities fall under regulated financial services, which require prior government approval. The case underscores a growing pattern where fintech startups offering credit-linked services are being questioned over regulatory arbitrage in FDI filings. In parallel, Paytm and its subsidiaries have come under the ED’s radar for alleged violations of foreign exchange rules. In April 2025, the agency issued a show-cause notice to One97 Communications, Little Internet, and Nearbuy India, citing FEMA breaches worth Rs 611 crore. The matter relates to overseas investments made between 2015 and 2019, which were made before Paytm acquired the entities, without following the RBI’s reporting and pricing norms. While Paytm has maintained that the issue predates its ownership and has no impact on current operations, the case adds to the growing list of startups grappling with retrospective scrutiny over FDI compliance. The scrutiny hasn’t been limited to the domestic startup ecosystem. Global forex trading platform OctaFX is under ED investigation for allegedly laundering nearly Rs 800 crore through unauthorized forex trading in India. The agency claims the firm used fake KYCs, mule accounts, and shell companies to route funds overseas. Assets worth over Rs 292 crore, including a yacht and Spanish real estate, have been attached, with the case ongoing under the PMLA. The ED’s widening crackdown signals a shift from legacy probes to deeper scrutiny of digital-first businesses. For founders and investors, compliance is no longer optional; it’s a live operational risk. The sheer breadth of probes also indicates just how badly tangled with red tape regulations remain in India, pushing everyone to break the rules in one way or another at times. The sheer number of hoops that firms have to jump through, and consequently, the huge amount of time they can save by taking what are sometimes advised as ‘safe shortcuts’, frequently leads to missteps. We have no doubt that, going by the letter of the law, perhaps even ED (which has a terrible conviction record, going more for settlements) will find some overstepping, besides the obvious criminality in some cases. But the larger issue remains the mess that are regulations, and the failure of regulators to address these issues. Regulation in India has been interpreted almost exclusively as a role whose job is to ‘protect’ the end consumer, something where it is easier to pass off tokenism as action. We believe regulators who take a more holistic view, including making life genuinely easier for the firms they are supposed to regulate, will achieve a lot more eventually for the whole ecosystem.

Funding and acquisitions in Indian startups this week [08-13 Apr]

EntrackrEntrackr · 1y ago
Funding and acquisitions in Indian startups this week [08-13 Apr]
Medial

This week as many as 21 Indian startups raised nearly $105 million in funding. These deals include six growth-stage deals and 12 early-stage deals. Meanwhile one growth-stage startup and two early-stage startups did not disclose the amount raised. Last week, about 30 early and growth-stage startups collectively raised around $172.71 million. [Growth-stage deals] Among the growth-stage deals, the six startups raised $54.5 million in funding this week. Compliance automation platform Sprinto led the list with $20 million in funding. The list was followed by B2B waste management and recycling marketplace Recykal, Housing finance company AVIOM HFC, digital lender Axio, and medical diagnostics platform 5C Network which raised $13 million, $10 million, $6 million, and $3 million, respectively. Further, made-to-order furniture manufacturer Arrivae while D2C coffee brand Blue Tokai Coffee also and secured undisclosed funds this week. [Early-stage deals] Subsequently, 12 early-stage startups scooped funding worth $50 million during the week. AI cloud and platform-as-a-service startup Neysa spearheaded the list followed by AI-powered revenue enablement platform GTM Buddy, underwater visual inspection services provider Planys Technologies, underwater visual inspection services provider Planys Technologies, paediatric behavioural and developmental health firm Butterfly Learnings, and electric mobility platform AutoNxt Automation. The list further includes the full stack eyewear platform, EyeMyEye, health insurance assistance provider CalimBuddy, elder care startup Age Care Labs, healthcare startup PlatinumRx, and defence-focused deeptech startup Zulu Defence Systems among others. The list of early-stage startups also includes 2 startups that kept the funding amount undisclosed: Paytring and BlackCarrot. [City and segment-wise deals] In terms of the city-wise number of funding deals, Bengaluru-based startups led with 8 deals followed by Mumbai, Delhi-NCR, Chennai, Hyderabad, and Kanpur. Segment-wise, healthtech startups are on top with four deals. The list further counts e-commerce, fintech, SaaS, Deeptech, and EV startups among others. The complete breakdown of deals across cities and segments can be seen below: [Series-wise deals] During the week, Seed funding deals are on the top spot with six deals while Series B deals are on the second position both forming around 52% of the total funding. Further, Series A, Pre-Series A, and Debt are next on the list among others. [Week-on-week funding trend] On a weekly basis, startup funding plummeted nearly 40% to $105 million as compared to around $170 million raised during the previous week. The average funding in the last eight weeks stands at around $243 million with 25 deals per week. The week-on-week funding trend can be seen below: [Departure] During the week, Surinder Chawla, the managing director and chief executive officer of Paytm Payments Bank, stepped down from his position, according to the disclosure filed by the associate entity One97 on the National Stock Exchange. [Fund launches] Three startup-focused funds were launched this week. Cornerstone Ventures, a venture capital firm, announced the launch of its second fund targeting $200 million with a green-shoe option of $50 million. Filter Capital, a technology-focused investment firm, closed its first fund at Rs 800 crore (approximately $96 million). Synapses also launched a $125 million VC fund at IIT Delhi’s Research and Innovation Park to back startups. [Layoffs] Tech upskilling startup Scaler has laid off approximately 150 employees, attributing the decision to a focus on long-term growth and sustainability. Co-founder Abhimanyu Saxena stated that the company is reevaluating its operations to achieve sustainable growth while ensuring the best learning experience for its users. [ESOP Buyback] Comfort-tech brand The Sleep Company announced the second tranche of ESOP (employee stock ownership plan) buyback for its employees this week. The current buyback will benefit a total of 105 employees, including 50% of women employees. [Mergers & Acquisitions] This week, Ghost Kitchens India acquired Shy Tiger Brands, a cloud kitchen company from Ahmedabad. Meanwhile, the National Investment and Infrastructure Fund (NIIF) acquired majority stakes in iBUS, a digital infrastructure solutions company, in a $200 million deal. Additionally, Symphony Technology Group (STG) acquired Eka Software Solutions, a Bengaluru-based commodities trade and risk management (CTRM) software company, with plans to merge it into STG’s portfolio company Quor Group. Postman also acquired SaaS platform Orbit during the period. [New launches] ▪️ Reliance-owned Tira forays into beauty accessories, launches ‘Tira Tools’ ▪️ Flipkart rolls out bus booking services on its app ▪️ Agritech startup DeHaat launches agrifood consumer brand ‘Honest Farms’ [Financial results this week] ▪️ Ripplr posts Rs 740 Cr gross revenue in FY23; controls losses ▪️ Power2SME gross revenue crosses 1,000 Cr in FY23; cuts losses ▪️ Portea’s revenue stays flat in FY23; losses grow 32% ▪️ MoneyView posts Rs 577 Cr revenue in FY23; profit spikes 27X [News flash this week] ▪️ Swiggy offers 20% discount to HNIs in pre-IPO deal ▪️ Invesco marks up Swiggy’s valuation to $12.7 Bn ▪️ IPO-bound Swiggy converts itself into a public entity ▪️ PhonePe’s merchant app MAUs on rise as Paytm falls behind ▪️ Ola, Uber unveil subscription-undefined models for auto drivers ▪️ Ola ceases operations in UK, Australian, and New Zealand markets [Conclusion] The rally of ups and downs continues as after a significant rise in funding, the weekly funding again shrank close to 40% this week. The week saw three fund launches namely Filter Capital, Cornerstone Ventures, and Synapses. The week saw another layoff as tech upskilling startup Scaler reportedly fired a part of their workforce. Swiggy is gearing up for its IPO after the upcoming Lok Sabha elections, having recently converted into a public entity. The company has shortlisted bankers for its IPO syndicate and is offering shares to high net-worth individuals at a 20% discount on its current valuation of over $12 billion. This move follows a recent markup in Swiggy’s valuation by US-based investor Invesco. PhonePe has surpassed Paytm in terms of monthly active users (MAUs) of its merchant app, according to data from App Annie recorded between mid-January to mid-March. Paytm experienced a 20% decrease in MAUs in the last quarter, while PhonePe saw a 20% increase. In March, Paytm had approximately 9 million MAUs, whereas PhonePe had around 11 million. In another development, Indian ride-hailing giant Ola has exited from the UK, Australia, and New Zealand, marking the end of its six-year stint in these markets. The decision reflects a strategic shift, with Ola focusing on its rapidly growing and profitable ride-hailing business in India. Meanwhile, Ola and Uber are shifting gears by offering subscription-based plans for auto-rickshaw drivers, a strategy reminiscent of their competitors Namma Yatri and Rapido. Instead of the traditional booking fee or commission per transaction, these plans aim to provide more stability and incentives for drivers.

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