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Sebi Bans Proficient Global, Proprietor From Markets For 2 Yrs In Unregistered Investment Advisory Services Case
Sebi noted that Proficient and Suryawanshi were engaged in the business of providing investment advice to the public, in lieu of monetary consideration and were thus, acting as an 'investment adviser'.
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Markets regulator Sebi on Thursday imposed a two-year ban on Proficient Global Research and its proprietor for carrying out unregistered investment advisory services and also directed them to refund the money collected through such activities. The order comes after the regulator had received a complaint alleging that Proficient and its proprietor Abhishek Suryawanshi were accepting payments from the clients of a Sebi registered investment advisor, Trifid Research, in lieu of providing unauthorised PMS (portfolio management services) to them.
In its order, Sebi noted that Proficient and Suryawanshi were engaged in the business of providing investment advice to the public, in lieu of monetary consideration and were thus, acting as an 'investment adviser'. However, they were not registered with Sebi in the capacity of investment adviser (IA). Hence, they violated the IA regulations, it added.
"The noticees without holding a certificate of registration as investment adviser have not only knowingly held themselves out as investment adviser but also have, inter alia promised assured returns on their website." Thus, I find that the noticees have also violated ...the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations," Sebi Whole Time Member S K Mohanty said in its final order.
Proficient and Suryawanshi were collectively referred to as noticees. Accordingly, the noticees have been barred from dealing in the securities market for a period of two years or "till the expiry of two years from the date of completion of refunds to investors ... whichever is later." In addition, they have been asked to refund the money received from investors in respect of their unregistered investment advisory activities within a period of three months.
As per the interim order, they received Rs 1.76 crore from investors. In its submission to Sebi, Suryawanshi did not deny the allegations levelled against him in the interim order, but said the Rs 1.76 crore received between January 2018 and January 2020 does not entirely relate to fees received from investment advisory services but also includes some income relating to a mushroom cultivation business undertaken by him.
In a separate order, Sebi levied a fine of Rs 5 lakh on Nilesh Vasantlal Mehta HUF for indulging in the execution of reversal trades in stock options contracts on the BSE, which were non-genuine and created the false appearance of trading in terms of artificial volumes in stock options, leading to violation of PFUTP norms. Through a separate order, the regulator has prohibited stock broker Transglobal Securities Ltd from registering new clients for a period of 3 months in an over a decade old case.
The conduct displayed by the broker in performing functions of an unregistered portfolio manager on behalf of its client, indulging in client code modifications, transferring profits from its various other clients' accounts to the account of certain clients and allotting multiple client codes to a single client, is certainly not in the interest of investors and the securities market, Sebi said. Such misconduct has certainly amounted to a violation of code of conduct for stock brokers as specified in the stock brokers rules, it added.