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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 · 2y 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.

Progcap nearly doubles revenue to Rs 268 Cr in FY25; nears breakeven

EntrackrEntrackr · 10d ago
Progcap nearly doubles revenue to Rs 268 Cr in FY25; nears breakeven
Medial

Progcap nearly doubles revenue to Rs 268 Cr in FY25; nears breakeven Peak XV and Tiger Global-backed fintech firm Progcap nearly doubled its revenue in the fiscal year ended March 2025. During the same period, the company reduced its losses by 87%. Progcap’s revenue from operations jumped 93% to Rs 268 crore in FY25 from Rs 139 crore in FY24, according to its financial statements sourced from the Registrar of Companies (RoC). Progcap facilitates debt capital for underserved micro and small businesses. The fintech platform digitizes supply chains and facilitates access to finance for last-mile retailers. Revenue from these services was the sole source of income for the company. Progcap made an additional Rs 10 crore from interest on deposits and gains on current investments, which pushed its total income to Rs 278 crore in FY25 from Rs 159 crore in FY24. On the cost side, employee benefit expenses accounted for 45% of total expenses. This cost remained flat at Rs 126 crore in FY25 as compared to Rs 124 crore in FY24. Finance costs surged over four times to Rs 91 crore in FY25 from Rs 22.5 crore in FY24. Write-offs also rose to Rs 24.5 crore from Rs 15 crore, while legal charges increased to Rs 6.5 crore. Overall, its total expenses grew 37% to Rs 279 crore in FY25 from Rs 203 crore in FY24. With the company’s revenue outpacing expense growth, Progcap managed to cut its losses by 87% to Rs 6 crore in FY25 from Rs 46 crore in FY24. The company posted a positive EBITDA of Rs 75 crore with an EBITDA margin of 27.99%. Its ROCE was 7.40% during the period. On a unit basis, the company spent Rs 1.04 to earn a rupee in FY25, compared to Rs 1.46 in FY24. The Gurugram-based firm reported cash and bank balances of Rs 207 crore at the end of March 2025, while its current assets rose to Rs 1,799 crore. Progcap has raised around $111 million of funding to date, having Tiger Global, Peak XV, Creation Investments and GrowX Ventures as its lead investors. Progcap’s co-founders, Pallavi Shrivastava and Himanshu Chandra, collectively hold a 23.41% stake in the company. Progcap’s competitor, FlexiLoans’ revenue grew 47% to Rs 385 crore in FY25. The company also increased its profit by 33% to Rs 4 crore in FY25 from Rs 3 crore in FY24. For Progcap, the shift from a capital light marketplace model till 2022, when it simply was the go between as large lenders took the risk, and having its own NBFC for lending has been a well-managed transition. While that has scaled up fund requirements and a possible IPO in the pipeline too, the firm has demonstrated a superior ability to deliver to the tier 2, 3 and beyond retailers it claims as stomping grounds. The firm has built some innovative products like credit on tap as it has learnt more about these customers, and that has built a sort of moat for it as well. Certainly a firm to watch as it delivers a possibly profitable FY26 and will certainly be a prime candidate for an IPO in time.

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

EntrackrEntrackr · 1y 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 · 7m 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.

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