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Sebi Bans Epic Research, 5 Individuals From Capital Markets
The selection of the products for the clients was being done by the non-qualified personnel working in the Sales Consulting Team and not by the personnel in the Research Team
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Sebi on Monday restrained Epic Research Pvt Ltd and five individuals from accessing the securities market for a period of three years for charging unreasonable and excessive fees from its clients, among other violations.
However, while calculating the period of debarment, the period of restraint already undergone by them on account of the interim order would be adjusted, the regulator said.
In December 2019, Sebi had passed an interim order against the company and individuals directing them to cease and desist from acting as an investment advisor and barring them from the capital markets till further orders.
The market watchdog had carried out an inspection of Epic Research for the period of April 1, 2017 to March 29, 2019.
During the probe it was found that only two employees out of seven of the company, who were providing the investment advice, were having the requisite NISM (National Institute of Stock Market) certifications.
The selection of the products for the clients was being done by the non-qualified personnel working in the Sales Consulting Team and not by the personnel in the Research Team, Sebi noted.
It was observed that Epic Research did not verify the information provided by the client for the purposes of risk profiling.
Further, the risk profile questionnaire of the company did not have a complete list of information to adequately assess the risk bearing capacity of the client, as mandated under Investment Advisers Regulations.
The said acts of misconduct and breach of trust on the part of the company clearly demonstrates that Epic and its officials have not acted fairly and transparently towards their clients, Sebi said.
They rather acted in a manner to cause inducement to the investors to deal in securities by manipulating their risk scores and making them buy investment products contrary to their risk appetites in a fraudulent manner, which were in violation of Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, it added.
As per the order, it was noticed that apart from charging the clients as per the fee structure fixed by it for its various products, Epic has also charged fees from the investors under a category which did not find mention in its notified list of products.
Epic had made unfair and unreasonable charges and has also levied service charges more than the amounts mentioned in the fee structure from its clients.
The individuals who were the directors and at the helm of the day-to-day affairs of Epic during the commission of the violations as held against the company are equally liable for those violative acts, the order said.
The company has also been directed to resolve the complaints pending against it in the SCORES and otherwise, within the period of 30 days from the date of this order.
In case of failure of Epic to comply with the directions passed in the final order, it would be restrained from accessing the securities market, for an additional period of three years, Sebi said.