Pentagon Stock Broker Mahavir Toshniwal Arrested for Fraud of Rs40 Crore

Mahavir Toshniwal, Managing Director (MD) of Pentagon Stock Brokers Pvt Ltd has been arrested by the Economic Crimes Wing (EOW) of the Mumbai Police in a fraud case of around Rs40 crore. Madhu Lunawat, co-founder and director of Pentagon Stock Brokers, had filed a complaint.

According to the complaint, Mahavir and Deepa Toshniwal, director of Pentagon Stock Brokers, had sold the clients’ shares and “instead of paying the proceeds to the clients, diverted the proceeds from the sale of the shares to themselves as well as personal accounts.” of Mahavir Toshniwal, his Hindu Undivided Family (HUF) and his wife Deepa”.

In the complaint, Ms Lunawat, Chartered Accountant (CA) and Executive Director of Pantomath Capital Advisors Pvt Ltd, states: “We have also learned that Mahavir and Deepa Toshniwal unlawfully and unauthorizedly pledged shares of Pentagon Stock brokers. ‘ clients, including our shares held with Pentagon Stock Brokers without the knowledge and consent of the affected stockholders.

“In addition to the above, four employees of Pentagon Stock Brokers, Vijay Singh, Jignesh Lathigra, Punit Agarwal and Subhashchandra Vishwakarma handed us a handwritten and signed letter, in which the above financial crimes of Mahavir Toshniwal are highlighted. For compensate and make up for these losses, Mahavir and Deepa Toshniwal sold shares owned by me and my husband Mahavir Lunawat and clients,” the complaint filed by Ms. Lunawat reads.

Talk with Moneylife, Mahavir Lunawat, the Founder of Pentagon Stock Brokers, also Group Founder and Managing Director of Pantomath Capital Advisors Pvt Ltd, a SEBI Registered Investment Banker, says: “In 2019, we spun off from Pentagon Stock Brokers and applied for the stock exchanges for the However, Mr. Toshniwal continued to use our names.When we asked him about Pentagon Stock Brokers business, he told us that since we have disassociated ourselves from the company, we should not not worry about his business.

The Lunawats hold a 70% stake in Pentagon Stock Brokers while the balance is held by the Toshniwals.

Madhu Lunawat said Moneylife, “As we were not directly involved in the business activity of Pentagon Stock Brokers, we resigned in 2017-2018. We had already entered into a deed of separation on December 31, 2019, pursuant to which Mahavir Toshniwal assumed full ownership of our shares in Pentagon Stock Brokers, subject to regulatory approvals.

“Around January this year,” says Mahavir Lunawat, “we learned about the fraud and informed the exchanges. Since most of the customers were there because of our names, we paid all their money from our internal resources and then decided to file a complaint with the police.”

Echoing the same, Ms Lunawat, Director of Pentagon Stock Brokers said, “After learning about financial mismanagement and fraud worth around Rs40 crore, I immediately joined (from Pentagon) at the request of the aggrieved parties and saved the whole situation. In April-May, we refunded dues of around Rs20 crore to around 25 clients, lenders and clearing members and all non-compliances have been rectified. Ultimately, we have now taken over the management oversight of Toshniwals brokerage business and achieved the level of compliance to our own standards. »

Moneylife also tried to contact the Toshniwals. However, there was no response.

According to National Stock Exchange (NSE) data, Pentagon Stock Brokers was formerly known as Pantomath Stock Brokers Pvt Ltd. As of September 28, 2021, data shows that Mahavir Prasad Toshniwal and Deepa Toshniwal are the nominee directors of the brokerage. Madhu Lunawat, Subhashchandra Vishwakarma, Kundan Lal Lunawat and Jignesh Lathigra are other directors of Pentagon Stock Brokers.

On ESB, however, all four, Ms. Toshniwal, Mr. Vishwakarma, Kundan Lal Lunawat and Mr. Lathigra are featured as nominee directors.

Ms. Lunawat says, “We wanted to invest in a brokerage firm and we made a deal with Mr. Toshniwal who is a CA and Corporate Secretary (CS) as he had extensive experience in brokerage for over 20 years. The arrangement was that a company in our group (Lunawat) was identified, which was called Pantomath Stock Brokers, and is now known as Pentagon Stock Brokers. Pentagon Stock Brokers was intended to do business as a “market maker”, a custodial participant and stockbroker for clients. Many clients have been referred by us to the Pentagon and have taken advantage of Pentagon brokerage and depository services due to our long standing business reputation.

In 2020-2021, NSE imposed a fine of Rs 5,000 on the broker.

According to data available on exchanges, Pantomath Capital Advisors appears as an associated company of the same group. NSE also lists Pantomath Fund Managers LLP as an associate firm of Pentagon Stock Brokers with a disclaimer, which reads: “Certain information displayed here is maintained by the member with NSE and available in NSE records.”

Dolores W. Simon