In a sweeping enforcement order, SEBI has directed Cinema Capital Venture Fund to shut down operations and return investor money by July 31, 2025, citing gross mismanagement, conflict of interest, and fraudulent practices that persisted for years despite prior regulatory penalties.
A Venture Fund in Name Only: How Cinema Capital Betrayed Investor Trust
Cinema Capital Venture Fund (CCVF), once registered as a SEBI-approved venture capital fund in 2008, was meant to invest in India’s growing media and entertainment sector. With a mandate of five years (extendable by two), the scheme was supposed to close in 2015. But nearly a decade later, investors are still waiting to receive their money back—and SEBI has now concluded that the wait was never meant to end.
In a 46-page order dated April 30, 2025, SEBI invoked Sections 11, 11B, and 15 of the SEBI Act to wind up the scheme, citing fraudulent practices, gross mismanagement, and repeated regulatory violations. The findings are stark: out of ₹175 crore raised from investors, only ₹7.93 crore was returned as of late 2023. Investments worth ₹2.47 crore remained pending liquidation, despite a prior adjudication order in 2019 that had already flagged irregularities.
SEBI described CCVF’s conduct as a display of “lethargic indifference and reckless negligence” a fund that violated its own mandate and actively misled investors about its intentions and practices.
Interest-Free Loans, Bad Debts, and Related Party Deals
One of SEBI’s most damning observations is how the fund diverted ₹94 crore as interest-free loans and advances to companies tied to its directors, trustees, and even its own staff—none of which were disclosed in the Private Placement Memorandum (PPM). The Fund subsequently wrote off ₹1.63 crore as bad debt, while another ₹62.5 lakh remained unpaid as of October 2023.
SEBI also found that ₹103 crore more than half of the total corpus—had been funneled into three associate companies: Kinesis Films, Stellar Films, and Waterfront Films, all controlled by CCVF insiders. This violated Regulation 12(c)of the SEBI Venture Capital Fund Regulations, which prohibits investments in associate companies unless disclosed and compliant with investment restrictions.
More alarming was the regulator’s conclusion that the fund made “false promises” in its PPM—claiming it would focus on generating returns through third-party investments while explicitly stating it would not invest in related entities. SEBI said the fund had “no intention of performing” those promises, establishing a case under fraudulent and unfair trade practices regulations.
SEBI’s Enforcement: Winding Up, Penalties, and Market Bans
To bring closure for investors and accountability for the fund’s managers, SEBI issued a series of enforcement directions:
1. Mandatory Winding Up by July 31, 2025
- Two independent valuations are to be conducted.
- Investors can opt for in-specie distribution (direct stake in remaining assets) or cash payout.
- A compliance report certified by a Chartered Accountant is due by August 21, 2025.
2. Disgorgement and Penalties
- ₹1.1 crore in total penalties imposed on seven noticees under Sections 15HA (fraud) and 15HB (regulatory violations).
- Urmila Gupta and Amrit Lal Suri ordered to refund ₹5 lakh in unauthorized fees to SEBI’s Investor Protection and Education Fund (IPEF).
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3. Market Ban on Key Officials
Individuals and entities connected to CCVF—including Cinema Capital Advisory Private Ltd, Cinema Capital Contributory Company, Samir Gupta, Shashanka Ghosh, Binay Mandal, Urmila Gupta, and Amrit Lal Suri—have been barred for three years from:
- Acting as directors or KMPs in SEBI-registered entities such as AIFs or mutual funds.
- Participating in any investment or fund management activity involving public money.