Order – Dollar Advisory and Financial Services

CGM/QJC-1/AA/WRO/WRO/21667/2022-23

SECURITIES AND EXCHANGE BOARD OF INDIA ORDER

UNDER SECTIONS 11(1), 11(4) AND 11B (1), 11B (2) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF THE SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES) RULES, 1995 

In respect of:

NOTICEE                                                                      REGISTRATION NO. 

Dollar Advisory and Financial Services-                INA000003882

(Proprietor Ravi Prakash Mohta) (PAN: AKBPM7004R)

405, Milan Heights, Near Agarwal Public School,  Indore, Madhya Pradesh- 452016.

BACKGROUND OF THE CASE 

1. Dollar Advisory and Financial Services (Proprietor: Mr. Ravi Prakash Mohta) (hereinafter referred to as “Noticee/Dollar”) is registered with the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) as an Investment Adviser (hereinafter referred to as “IA”) with effect from December 09, 2015 having SEBI registration number INA000003882.  

 2. SEBI had conducted an inspection of the Noticee for the period from April 01, 2018 to March 02, 2020 (hereinafter referred to as “Inspection Period”). The focus of the inspection was to look into the compliance of regulatory requirements stipulated under the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”), SEBI (Investment Advisers) Regulations, 2013 (hereinafter referred to as “IA Regulations”) and other circulars and guidelines framed thereunder.  

SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING 

3. Based on the findings of inspection, a Show Cause Notice dated April 28, 2022 (hereinafter referred to as “SCN”) along with the following annexures was issued to the Noticee.

Table A

 4. The SCN dated April 28, 2022 has inter alia observed/ alleged as under and advised the Noticee to show cause as to why suitable directions under sections 11(1), 11(4) and 11B(1) shall not be issued against it and why suitable penalty under section 11 (4A) and 11B(2) of the SEBI Act read with section 15HA, 15HB (for violations prior to March 08, 2019) and 15 EB (for violations subsequent to March 08, 2019):

A. Non-submission of information and documents to be submitted as per the statement under Oath

The Noticee failed to submit complete information which he undertook to submit under a statement of oath. Thus, Noticee is alleged to have violated the regulations 13 (a), 15(12) of IA Regulations and clause 8 of Code of Conduct of IA Regulations as specified under Third Schedule read with regulation 15(9) of IA Regulations. 

B. Noticee engaged representatives for rendering Investment Advice and Research Analyst without registration and information to SEBI

None of the employees/ representatives of the Noticee fulfilled the eligibility criteria as applicable to a registered investment adviser. Thus, Noticee is alleged to have violated regulation 7 read with provisions of regulation 15(13) of IA Regulations. Further, Noticee is alleged to have violated clauses 1, 2, 3 and 8 of Code of conduct for Investment Adviser provided in Third Schedule read with regulation 15(9) of IA Regulations.

It is alleged that the Noticee had provided false undertaking to SEBI while seeking registration, by stating that its Proprietor Mr. Ravi Prakash Mohta would be solely responsible for rendering investment advice. Thus, Noticee is alleged to have violated regulations 3(a), (b), (c), (d) and 4(1) of PFUTP Regulations read with section 12A(a), (b) and (c) of SEBI Act, 1992.

C.Noticee’s operations are not conducted from its Registered Office

It was observed that Noticee was operating its business from different addresses. The Noticee had failed to submit complete information about the change in registered office to SEBI. Further, during the statement under oath, Mr. Ravi Prakash Mohta has, inter alia, submitted that Noticee had operated from 4 different addresses during the period from December 28, 2015 (i.e. date of registration) to March 2, 2020 (date of commencement of inspection). However, it was observed that Noticee had applied to SEBI for change in address to 54, Scheme No. 54, PU-4, Vijay Nagar, Indore only once on September 20, 2018. In this regard, SEBI, vide letter dated September 23, 2019, issued certificate with change of address. Having failed to disclose the change of address to SEBI, it is alleged that the Noticee has violated Regulation 13(b) of IA Regulations, clause 1 and Clause 8 of Code of Conduct as mentioned in Third Schedule read with regulation 15(9) of IA Regulations.

D.  Risk Profiling Form

It is alleged that the questions mentioned in the questionnaire have been framed in such a manner so that it would be difficult for the clients to understand and provide an appropriate response. It is also observed that few questions, whose combined score is 25% of the total score are unclear. Thus, it is alleged that Noticee has violated regulation 16(b)(iii) and 16(d)(i) of IA Regulations.

 It is observed that the questions as mentioned in questionnaire have been purposely framed in a manner so as to confuse the client. By assigning 25% of the total score to these questions, it appears that the endeavor of Noticee was to categories the clients in ‘High Risk’ and try to deceive the clients. The modus operandi adopted by Noticee amounts to ‘fraud’ as defined in regulation 2(1)(c) of PFUTP Regulations. In view of this, Noticee is alleged to have violated regulation 3(a), (b), (c) and (d) of PFUTP Regulations read section 12A(a), (b) and (c) of SEBI Act. 

E. Non availability of supporting documents for risk profiling 

It was observed that the Noticee has neither obtained any documentary evidence for KYC records of clients, nor kept any telephone conversation while carrying out Risk profiling of its clients. Thus, by failing to maintain documentary evidence for KYC records of client, telephonic conversation while carrying out Risk profiling of its clients, Noticee is alleged to have violated regulation 19 (1) and 19 (2) of IA Regulations.

F. Devised multiple packages which are essentially offering same service 

It is alleged that Noticee has adopted unethical business practices by offering multiple packages with different fee structures to clients. However, it is observed that these packages essentially had same services.

It is alleged that the Noticee has deliberately devised multiple packages (which are essentially offering same service) to earn huge amount of service fees from its clients. It is also alleged that Noticee has failed in its responsibility to act in fiduciary capacity to its clients. Thus, Noticee is alleged to have violated regulation 15 (1) of IA Regulations and clauses 1, 2 and 6 of the Code of Conduct for Investment Advisors as specified in Schedule III of IA Regulations read with regulation 15 (9) of IA Regulations.

G. Non-communication of Risk Profile and suitability assessment to clients and starting investment advisory services without confirmation of client on Risk Profile

The products had already been sold by the IA and advisory fees had been charged even before the risk profiling of the client was completed. It is observed that the products sold would not be appropriate to the clients’ need as the risk profiling has not been completed for the client. In this regard, it is alleged that the IA had sold products just to earn advisory fees.

It is alleged that the IA deceived the clients into buying its different products without understanding the clients’ needs. It also alleged that the IA deceived the clients into buying its different products without understanding the clients’ needs and it acted with sole aim to earn profits by selling products without caring for the needs of the clients.

Therefore, the Noticee by selling its products and charging advisory fees from the clients without undertaking risk profiling of client, the Noticee is alleged to have violated regulation 17(a) of IA Regulations and violated clauses 1, 2 and 4 of Code of Conduct as mentioned in Schedule III read with regulation 15(9) of IA Regulation and regulation 3(a), (b), (c), (d) and 4(1) of PFUTP Regulations read with section 12A(a), (b) and (c) of SEBI Act, 1992.

H. Suitability Assessment

It is alleged that Noticee has kept own interest ahead of his clients’ interest and has failed to take due care and diligence to ascertain risk profile of the client and to offer him suitable advice. Thus, it is alleged that Noticee and its proprietor Mr. Ravi Prakash Mohta have violated regulations 15(1), 17(a), 17(d) and 17(e) of IA Regulations and Clauses 1, 2 and 6 of Code of Conduct as mentioned in Schedule III read with regulation 15(9) of IA Regulations and regulations 3(a), (b), (c) and (d) of PFUTP Regulations, 2003 read with section 12A(a), (b) and (c) of SEBI Act, 1992.

I. Charging Advisory fees before expiry of tenure of existing service/collecting multiple payments in short period

It is observed that Noticee was selling same advisory products/services to the clients before completion of the tenure of the previous service. And for one client, it had charged multiple times for one single service even before the expiry of duration of that service.

Further, in some cases, in short span of one month, more than 5 invoices were raised by Noticee and huge amount of fees were charged from the clients. Thus, it is alleged that that these acts of Noticee have been carried out with the purpose of defrauding the clients and to earn maximum fees and alleged to have violated regulation 3(a), (b), (c), (d) of PFUTP Regulations, 2003 read with section 12A(a), (b) and (c) of SEBI Act and clauses 1, 2 and 6 of Code of Conduct for Investment Advisers as provided in Third Schedule of IA Regulations read with regulation 15(9) of IA Regulations.

J. PMLA/ AML Provisions 

It is observed that there was considerable delay of 955 days i.e. (date of appointment of Principal Officer August 09, 2018 and date of registration as IA December 28, 2015) in appointment of Principal Officer and the communication sent to FIU for appointment of Principal Officer. Thereby, it is alleged that Noticee has violated the of provisions of SEBI Circular January 18, 2006 read with SEBI Master Circular dated December 31, 2010 and SEBI Master Circular dated July 04, 2018 and has violated the provisions of SEBI Circular CIR/MIRSD/1/2014 dated March 12, 2014 for appointment of Designated Director.

It was observed that Noticee had failed to provide any policy with respect to PMLA and training provided to its employees. Thus, Noticee is alleged to have violated SEBI circular dated December 19, 2008, as amended vide SEBI Master Circular dated February 12, 2010, December 31, 2010, July 4, 2018 and October 15, 2019, w.r.t. Guidelines on Anti Money Laundering (AML). It is further alleged that Noticee has violated clauses 8 and 9 of Code of Conduct for Investment Advisers as mentioned in Schedule III of IA Regulations read with regulation 15(9) of IA Regulations. 

K. Non Redressal of Investor Grievances

It is observed that Noticee has failed to submit the ATR in a time bound manner as prescribed by SEBI and has also failed to resolve investors’ grievance, Thus, it is alleged that Noticee has violated SEBI Circular CIR/OIAE/2014 dated December 18, 2014 and regulation 21(1) of IA Regulations.

L. Trading on behalf of clients by Noticee

It is observed from the call records provided by the complainant Shri K. Nayeem Taj that prima facie Noticee has traded on their behalf.  From the analysis of trade details of the complainants, it was observed that the demat/ broking accounts of some clients were accessed from Indore, Madhya Pradesh where the office of Noticee is located. Thus, prima facie it appears that the trades were executed in such accounts by the IA.

 It is noted that an IA is in the business of providing investment advice in respect of securities and investment products. It is outside the scope of its activities to trade on behalf of its clients. In view of this, it is alleged that Noticee has violated regulation 15(1), clauses 1 and 2 of Code of Conduct as specified under Third Schedule read with Regulation 15(9) of IA Regulations. 

M. Compliance with SEBI Circular dated December 27, 2019

Based on the observations made with respect to compliance with SEBI Circular no. SEBI/HO/IMD/DF1/CIR/P/2019/169 dated December 27, 2019 by Noticee it is alleged that the Noticee has violated Clause 1.1 of SEBI Circular no. SEBI/HO/IMD/DF1/CIR/P/2019/169 dated December 27, 2019.

5. The Noticee vide letter dated June 23, 2022, submitted its reply to the SCN dated April 28, 2022. The Noticee in the aforesaid letter referred to its earlier letter dated November 19, 2021 wherein the Noticee had stated that he has stopped taking new clients and owing to factors such as parents’ illness, the Noticee has decided to close his business and requested SEBI to consider the Noticee’s application for surrender of his certificate of registration as an Investment Advisor. Vide the aforesaid letter dated June 23, 2022, the Noticee also submitted a detailed point wise reply to the allegations levelled against it.

6. The Noticee vide letter dated October 18, 2022 re-submitted its reply dated June 23, 2022 along with the annexures and enclosures referred thereto. The Noticee has stated therein that the said written submissions are the same as submitted on June 23, 2022 along with the bookmark and page numbering.

7. A hearing scheduled on October 19, 2022 was adjourned at the request of the Noticee on the ground that the festival was Diwali was approaching. Accordingly, another opportunity of hearing was granted to the Noticee on November 03, 2022. The Noticee along with his authorized representative, Mr. Kushal Shah ((hereinafter referred to as “AR”) appeared for the hearing. During the course of the hearing, the Noticee inter alia made the following submissions:

• The Noticee reiterated the submissions made vide his reply dated June 23, 2022.
• The Noticee has stopped taking new clients since September 2019.
• There are only 4 SCORES complaints pending against the Noticee and the Noticee is in the process of redressing the same.
• As regards non submission of documents, the Noticee submitted that the documents were provided to SEBI during inspection. Some of the documents could not be submitted due to the nationwide lockdown in March 2020. However, later on all the remaining documents were provided to SEBI.
• Change in registered address was intimated to SEBI every time the address was changed.
• The Risk Profiling Form used by the Noticee is similar to that used by the industry and companies like Bajaj Finserv.
• As regards the allegation of non-communication of risk profiling and providing advisory services prior to risk profiling, the Noticee relied on Annexure 20 and 21 of his reply dated June 23, 2022 to show that only after the clients acknowledged the Suitability Assessment Report, the services were provided.
• The Noticee did not trade on behalf of his clients. The clients were educated not to disclose any personal details and the employees were sensitized to refrain from obtaining demat account details and other details from clients.
• As regards violation of PMLA provisions, the Noticee has submitted that since the Noticee is a proprietorship, the Proprietor, Mr. Ravi Mohta was under the impression that he would be the designated director.

8. During the hearing, the Noticee also requested that he may be granted ten days to provide his post hearing submissions and the same was granted. However, the same have not been received.

CONSIDERATION OF ISSUES AND FINDINGS 

9. I have considered the material available on record i.e. the SCN, oral and written submissions including the Noticee’s reply dated June 23, 2022 and based on the aforesaid frame the following issues for consideration:

Issue No. I: Whether the Noticee failed to submit complete information which he undertook to submit under the statement of oath latest by March 20, 2020 and April 03, 2020?

Issue No. II: Whether Noticee engaged representatives for rendering Investment Advice without adequate qualifications and information to SEBI?

Issue No. III: Whether the Noticee failed to disclose change in registered address? 

Issue No. IV: Whether the Noticee violated norms pertaining to risk profiling?

Issue No. V: Whether the Noticee has failed to maintain records pertaining to risk profiling and risk assessment of the client in terms of Regulation 19 of the IA Regulations? 

Issue No. VI: Whether the Noticee has deliberately devised multiple packages which are essentially offering same service to earn huge amount of service fees from its clients and thereby failed in its responsibility to act in fiduciary capacity to its clients?

Issue No. VII: Whether the Noticee failed to communicate the risk profile and suitability assessment to clients and started investment advisory services without confirmation of client on Risk Profile? 

Issue No. VIII: Whether the Noticee provided Investment Advisory services prior to risk profiling? 

Issue No. IX: Whether the Noticee has selected and sold package/ product/services without any regard to the financial situation, risk tolerance level/ loss absorbing capacity of the client? 

Issue No. X: Whether the Noticee was charging Advisory fees before expiry of tenure of existing service/ collecting multiple payments in short period? 

Issue No. XI: Whether the Noticee failed to comply with the SEBI Circulars in relation to compliance with provisions of the Prevention of Money Laundering Act and Anti Money Laundering Guidelines? 

Issue No. XII: Whether the Noticee failed to redress the grievances of investors?

Issue No. XIII: Whether the Noticee traded on behalf of its clients? 

Issue No. XIV: Whether the Noticee failed to comply with SEBI Circular dated December 27, 2019? 

10. I, now, proceed to deal with the Issues framed hereinabove, individually.

Issue No. I: Whether the Noticee failed to submit complete information which he undertook to submit under the statement of oath latest by March 20, 2020 and April 03, 2020 respectively, thereby, violating regulations 13 (a), 15(12) of IA Regulations and clause 8 of Code of Conduct of IA Regulations as specified under Third Schedule read with regulation 15(9) of IA Regulations?

11. I note that an inspection of the Noticee was carried out during March 02 – 06, 2020 for the inspection period from April 01, 2018 to March 02, 2020. During the inspection, a “Statement of Examination on Oath” of Mr. Ravi Prakash Mohta, Proprietor of the Noticee was recorded on March 06, 2020 wherein the Noticee had undertaken to submit certain information/ documents to the Inspection Team within the time period mentioned in the statement. The details of the information/ documents are as under: 

Table no. 1

 12. I note that email dated March 17, 2020 was issued by SEBI to the Noticee advising the Noticee to submit the documents latest by March 20, 2020. Further, vide email dated March 24, 2020, SEBI informed the Noticee that although it has submitted the documents/ information pertaining to question nos. 4, 16, 17 and 22 vide email dated March 23, 2020, SEBI was yet to receive documents/ information pertaining to the remaining questions.

13. I note that the Noticee in his reply has submitted that certain data was provided to SEBI vide emails dated March 09, 2020, March 10, 2020 and March 23, 2020 and has referred to Annexures no. 1 to 1B of its reply. Additional details sought by SEBI as mentioned in its letters dated March 17, 2020 and March 23, 2020 were also provided as annexures 3 to 3E to the DA vide its reply.

14. I have perused the annexures and I note that pursuant to the recording of “Statement of Examination on Oath” of Mr. Ravi Prakash Mohta, the Noticee has submitted the following documents:

Table No. 2

15. As regards the information pertaining to process of Risk profiling of clients, Suitability Investment Reports and procedure for carrying out Risk Profiling appearing at sr. no. 7 of Table no. 1, I note that the Noticee in his reply dated June 23, 2022 has submitted that the said information was provided vide letter dated February 26, 2020 and produced the same as Annexure 3 to his reply. I have perused the said annexure and note that the letter dated February 26, 2020 is addressed to SEBI. I note that the letter states that a copy of sample risk profiling and suitability report are enclosed, however, I note that the said copies have not been annexed. Therefore, I am unable to conclude that the said information was provided by the Noticee on February 26, 2020.

16. I note that in response to the information sought at sr. no. 5 of Table no. 1 i.e. Landline number and mobile number used by the Noticee and its employees for calling clients with supporting documents, the Noticee in his reply dated June 23, 2022, submitted copies of 2 bills of Tata Docomo having account number 948652797 and 7316601899 and copy of one bill of Vodafone having account number 7317148152. I note that in Enquiry Proceedings initiated under the SEBI (Intermediaries) Regulations, 2008 (hereinafter referred to as “Intermediaries Regulations”) against the Noticee, order dated November 24, 2022 (hereinafter referred to as Enquiry Order”) has been passed by me cancelling the registration of registration of the Noticee as an Investment Adviser wherein I have noted that the said information at sr. no. 5 of Table no. 1 has been provided for the first time vide the Noticee’s reply dated December 09, 2021 i.e. after the initiation of the enquiry proceedings.

17. As regards submission of PMLA Policy appearing at sr. no. 12 of Table no. 1, I note that the Noticee in his reply dated June 23, 2022, has provided the said PMLA Policy. In response to the information sought at sr. no. 13 of Table No. 1, I note that the Noticee has provided a copy of snapshot from the dashboard of SEBI SCORES portal along with his reply dated June 23, 2022. Furthermore, as regards the SOP used by tele callers for client solicitation (sr. no. 16 of Table no. 1), the Noticee has provided the same along with his reply dated June 23, 2022. It is pertinent to mention that even in the Enquiry Proceedings, I have noted that the aforesaid information was provided for the first time vide the Noticee’s reply dated December 09, 2021 in the said proceedings. In view of the aforesaid, I note that the said information was not provided to the SEBI’s Inspection team during the Noticee’s inspection from March 02-06, 2020 and thereafter despite sending several reminders. 

18. Furthermore, taking into consideration the information at Table no. 1 and 2, I note that the Noticee has, even as on date, failed to furnish the following information to SEBI:

Table No. 3

19. I note from Table no. 3 that although the Noticee has made the said submissions as captured in Column ‘C’ of the said Table, the Noticee has not produced any proof to substantiate his claims.

20. The Noticee has also submitted that due to countrywide lockdown and curfew imposed because of COVID 19 pandemic, the Noticee’s office/ place where the books of account are kept was closed and it was not possible to compile the requisite data and details at the relevant time. The Noticee also submitted that vide email dated October 04, 2020, the Noticee had informed SEBI that it was not taking any clients and that it did not have any staff member working with it which led to further delay in compiling the information.

21. In this regard, I note that the restrictions imposed in connection with the nationwide lockdown had been eased from July 2020 onwards. The Noticee could have submitted the information/ documents anytime thereafter. However, I note that the Noticee waited for the enquiry proceedings to be initiated, pursuant to which it has provided certain additional information, specifically mentioned at Table no. 2. I also note that the Noticee has failed to submit the information captured in Table no. 3 hereinabove till date and no plausible explanation has been provided for the same.

22. At this stage, I find it pertinent to reproduce the relevant regulations as under:

Conditions of certificate.  13. The certificate granted under regulation 9 shall, inter alia, be subject to the following conditions:-

(a) the investment adviser shall abide by the provisions of the Act and these regulations; 

 General responsibility.  

15. 

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(12) Investment advisers shall furnish to the Board information and reports as may be specified by the Board from time to time.

THIRD SCHEDULE  

CODE OF CONDUCT FOR INVESTMENT ADVISER

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8. Compliance – An investment adviser including its partners, principal officer and persons associated with investment advice shall comply with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of clients and the integrity of the market.

PROCEDURE FOR ACTION IN CASE OF DEFAULT  

Liability for action in case of default.  

28. An investment adviser who –

(b) fails to furnish any information relating to its activity as an investment adviser as required by the Board; 

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(e) does not co-operate in any enquiry, inspection or investigation conducted by the Board; 

23. In view of the above, I note that the Noticee has failed to furnish the information sought by SEBI. Therefore, I find that the Noticee has violated the Regulations 13 (a), 15 (12) of IA Regulations and clause 8 of Code of Conduct of IA Regulations as specified under Third Schedule read with regulation 15(9) of IA Regulations. 

Issue No. II: Whether the Noticee engaged representatives for rendering Investment Advice without adequate qualifications and information to SEBI in violation of regulation 7 read with provisions of regulation 15(13) of IA Regulations and Clauses 1, 2, 3 and 8 of Code of conduct for Investment Adviser provided in Third Schedule read with regulation 15(9) of IA Regulations?

24. I note that in the application dated November 09, 2015 submitted by the Noticee for seeking registration as an investment adviser, the Noticee has, in reply to the question “Number of employee and agents of applicant, if any, who shall render investment advice under these regulations on behalf of applicant”, stated that there would be no such employee and that Mr. Ravi Prakash Mohta (Proprietor) would be solely responsible for the same.

25. As per regulation 7(1) of IA Regulations, the representatives of an IA are required to fulfil the eligibility criteria of a registered investment adviser while rendering investment advice services. Regulation 7(2) of IA Regulations require a representative of an Investment Advisor who is rendering investment advice to have at all times, a certification on financial planning/fund/asset/portfolio management or investment advisory services either from NISM or any other recognized institute. The term “representatives” is defined under regulation 2(1)(r) of the IA Regulations as employees of an investment adviser who render investment advice on behalf of that investment adviser.

26. Regulation 7 (2) of the IA regulations was amended w.e.f. September 30, 2020, the provision prior to the amendment is quoted or reproduced as under:

Qualification and certification requirement.

“7(1) An individual registered as an investment adviser under these regulations and partners and representatives of an investment adviser registered under these regulations offering investment advice shall have the following minimum qualifications, at all times:

• A professional qualification or post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science from a university or an institution recognized by the central government or any state government or a recognised foreign university or institution or association; or
• A graduate in any discipline with an experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.

 (2) An individual registered as an investment adviser and partners and representatives of investment advisers registered under these regulations offering investment advice shall have, at all times, a certification on financial planning or fund or asset or portfolio management or investment advisory services:

(a)from NISM; or

(b)from any other organization or institution including Financial Planning Standards Board India or any recognized stock exchange in India provided that such certification is accredited by NISM”

27. I note that the Noticee has vide his reply dated June 23, 2022 submitted that none of his employees fall under the category of “representative”. The Noticee has also submitted that the investment advice was provided by the Notice alone and in the process he was assisted by Mr. Ram Naresh Singh who was in turn assisted by Mr. Rishabh Singh Yadav and Mr. Lalit Kumar Mehta. 

28. The Noticee in the “Statement of Examination on Oath” dated March 06, 2020 responded to question no. 36 “please inform whether your employees are/ were meeting the criteria of representative of Investment Advisor as per IA Regulations, 2013 including NISM certificates”, by stating “No, they were/ are not meeting criteria of representative of Investment Advisor as per the IA Regulations, 2013 and they do not hold NISM certificates.”

29. I note that in terms of regulation 2 (r) of the IA Regulations, the term “representative” means an employee or an agent of an investment adviser who renders investment advice on behalf of that investment adviser. I note that the definition of the term “investment advice” under regulation 2(1)(l) of IA Regulations also includes “financial planning”. The term “financial planning” inter alia, includes assessing financial situation, identification of financial goals and developing and recommending financial strategies. From the above provisions of IA Regulations, it is clear that risk profiling, through which financial situation is assessed and investment strategies are recommended, constitutes a vital part of the investment advice. I note from the SCN that the employees of the Noticee were filing the Risk Profile Questionnaire over telephone for the clients and selling the products offered by Noticee. The said activity performed by the employees of the Noticee falls under the meaning of “financial planning” and thereby falls under the definition of “investment advice”. 

30. I note that the Noticee has submitted that in the agreement executed between the Noticee and the client, it is mentioned that the investment advice is in written via electronic mail or SMS on registered mobile, no verbal communication from any of the executives or otherwise under any circumstance shall be considered as investment advice. According to the Noticee, the sales team or tele callers just enquired about the basic details such as age, name etc. In this regard, I note from the Enquiry Order that the investor/ client Mr. K Ramakrishna Prabhu vide email dated January 14, 2020 has stated that “…Through phone calls they forced, embarrassed, mislead and cheat in each and every way, though through mails, through Caution Note and Disclaimer (which they sent after maximum of the amount has been forcibly collected through phone calls for services on annual basis) they thrust all risk upon the client/ customer and desist from taking any responsibility for the huge losses incurred due to their irresponsible phone call advice. Likewise they have cheated in each and every respect even after collecting huge amount i.e. Rs. 7,57,672 by way of service charges for advisory services in various names.” In light of the aforesaid, I note that the Noticee’s act of entering into an agreement with clients which included clauses inter alia mentioning that no verbal communication from any of the executives of the Noticee shall be considered by the clients, appears to be done only to safeguard the Noticee from any punitive action from the regulator, and therefore, the aforesaid argument of the Noticee is not acceptable. 

31. The Noticee in his reply has stated that around 400 employees worked for it during the period from April 01, 2018 to August 31, 2019 and at no point 400 employees were working together. I note that the SCN dated April 28, 2022 does not make a reference to 400 employees. However, the same has been dealt with in detail at para 32 of the Enquiry order. Therefore, I am not dealing with the submissions of the Noticee in this regard, as the same has been dealt with in the Enquiry Order.

32. It is pertinent to note the relevant provisions of law:

IA Regulations (prior to amendment of Regulation 15 (13)  “General responsibility.

15. 

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(13) It shall be the responsibility of the Investment Adviser to ensure that its representatives and partners, as applicable, comply with the certification and qualification requirements under Regulation 7 at all times. 

THIRD SCHEDULE  

CODE OF CONDUCT FOR INVESTMENT ADVISER 

1. Honesty and fairness – An investment adviser shall act honestly, fairly and in the best interests of its clients and in the integrity of the market. 

2. Diligence – An investment adviser shall act with due skill, care and diligence in the best interests of its clients and shall ensure that its advice is offered after thorough analysis and taking into account available alternatives.

3. Capabilities – An investment adviser shall have and employ effectively appropriate resources and procedures which are needed for the efficient performance of its business activities.

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8. Compliance  – An investment adviser including its representative(s) shall comply with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of clients and the integrity of the market.

33. The issue here is whether the Noticee’s employee/ representatives who have dealt with the clients and carried out risk profiling, sold products of the Noticee, etc. did not have requisite qualifications and certifications as prescribed under regulation 7 of IA Regulations. In view of the discussions above, I note that that none of the employees/ representatives fulfilled the eligibility criteria as applicable to a registered investment adviser. As per regulation 15(13) of the IA Regulations, it shall be the responsibility of the investment adviser to ensure that its representatives comply with the certification requirements as prescribed under regulation 7 of IA Regulations. In view of the above, I find that the Noticee has violated regulation 7 read with provisions of regulation 15(13) of IA Regulations. Further, the Noticee has also violated clauses 1, 2, 3 and 8 of Code of conduct for Investment Adviser provided in Third Schedule read with regulation 15(9) of IA Regulations.

34. I note that in the application dated November 09, 2015 submitted by Dollar for seeking registration as an investment adviser, in reply to question “Number of employee and agents of applicant, if any, who shall render investment advice under these regulations on behalf of applicant”, Mr. Ravi Prakash Mohta, inter-alia, stated that there would be no such employee and he would be solely responsible for the same. The SCN has alleged that the Noticee had provided false undertaking to SEBI while seeking registration, by stating that its Proprietor Ravi would be solely responsible for rendering investment advice and therefore, observed that the above conduct of Noticee comes under the definition of ‘fraud’ as mentioned in regulation 2(1)(c) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003 (hereinafter referred as “PFUTP Regulations”). Accordingly, the SCN has observed that the Noticee has violated regulations 3(a), (b), (c), (d) and 4(1) of PFUTP Regulations read with section 12A(a), (b) and (c) of SEBI Act, 1992. However, I am unable to agree with the aforesaid allegation as as providing false information in itself to SEBI would not constitute as “fraud” under the PFUTP Regulations.

Issue No. III: Whether the Noticee failed to disclose change in registered address and thereby violated Regulation 13(b) of IA Regulations, clause 1 and Clause 8 of Code of Conduct as mentioned in Third Schedule read with regulation 15(9) of IA Regulations? 

35. I note that the SCN has observed that the Noticee failed to disclose the change of address to SEBI, and therefore, violated Regulation 13(b) of IA Regulations, clause 1 and Clause 8 of Code of Conduct as mentioned in Third Schedule read with regulation 15(9) of IA Regulations. In this regard, I note that at the time of seeking registration as an Investment Adviser, the Noticee, in its application dated November 09, 2015, submitted the following as the registered office address: “204, Westend Corporate, New Palasia, Indore, Madhya Pradesh”. In 2017, the Noticee made an application to SEBI (received by SEBI-Indore Local Office on February 13, 2017) for change in its registered office address from 204, Westend Corporate, New Palasia, Indore, Madhya Pradesh to 404, Tulsi Tower, 22/3, South Tukoganj, Geeta Bhawan Square, Indore. In this regard, SEBI, vide its letter dated September 01, 2017, sought clarification from the Noticee that no online application has been made in SEBI SI portal for change of address. In its response, the Noticee submitted that they tried to upload the details for change of address but there was some system issue.

36. Subsequently, the Noticee, vide its letter dated September 20, 2018 informed SEBI about change in registered office address to 54, Scheme No. 54, PU-4, Vijay Nagar, Indore. Accordingly, SEBI vide its letter dated September 23, 2019, issued certificate with change of address.

37. I note from the SCN that the Noticee was operating its business from the following addresses:

38. In this regard, the Noticee has submitted that the office at 404, Tulsi Tower was interconnected with the office at 403, Tulsi Tower and that the office at 413, Tulsi Tower was in front of the main office, and therefore, the Noticee has submitted that there have been no lapses. Furthermore, as regards, Office no. 56, the Noticee has submitted that vide letter dated September 13, 2017, SEBI was informed that it was used for training and development purpose. As regards, the address at 54, PU – 4, Scheme 54, the Noticee has stated that the same was informed to SEBI and the certificate of registration was amended accordingly by SEBI.

39. In this regard, it is pertinent to look at regulation 13 (b) of the IA Regulations which is reproduced as under:

“Conditions of certificate.  

13. The certificate granted under regulation 9 shall, inter alia, be subject to the following conditions:-

…

… … 

(b) the investment adviser shall forthwith inform the Board in writing, if any information or particulars previously submitted to the Board are found to be false or misleading in any material particular or if there is any material change in the information already submitted”

40. I note that the Noticee informed SEBI about the change of its registered office from 204, Westend Corporate, New Palasia, Indore, Madhya Pradesh to 404, Tulsi Tower, 22/3, South Tukoganj, Geeta Bhawan Square, Indore. I also note that at the time of change of its registered address from 404, Tulsi Tower, 22/3, South Tukoganj, Geeta Bhawan Square, Indore to 54, Scheme No. 54, PU-4, Vijay Nagar, Indore, the Noticee informed the same to SEBI and accordingly, SEBI vide its letter dated September 23, 2019, issued a certificate with change of address. Therefore, I find that Noticee has not violated Regulation 13(b) of IA Regulations read with Clauses 1 and 8 of Code of Conduct as mentioned in Third Schedule read with regulation 15(9) of IA Regulations.

Issue No. IV: Whether the Noticee violated norms pertaining to risk profiling more specifically regulation 16(b)(iii) and 16(d)(i) of IA Regulations read with regulation 3(a), (b), (c) and (d) of PFUTP Regulations read with section 12A(a), (b) and (c) of SEBI Act?

41. The SCN has observed that the Noticee has 12 questions to measure risk appetite/tolerance of the clients in Risk Profiling Form (hereinafter referred to as “RPF”). In the RPF, corresponding to each question, a set of answers had been mentioned. Each answer has been assigned particular weightage. The total score is calculated and risk category of the client as well as risk appetite of the client is assessed, depending on the response of the client. The maximum total score assigned for RPF is 48 (4 marks each for 12 questions).

The risk category of the client based on RPF scores is tabulated below: 

Table No. 4

42. I note from the SCN and the Risk Profiling Form submitted by the Noticee that the Noticee has categorized risk categories in three categories namely “High, Moderately High and Medium category” which was confirmed by Mr. Ravi Prakash Mohta in his statement recorded on March 06, 2020. The relevant extract is reproduced as under:

“Q. 26: Laxminarayan Sangtani KYC documents submitted the during the course of inspection by you, only provides SCORES for three risk category namely, Low Risk, Medium Risk and High Risk. So please provide the SCORES assigned to Moderately High Risk category clients? Ans. We do not have SCORES for Moderately High Clients.”

43. I note from the SCN and the Risk Profiling Form submitted by the Noticee that at the time of carrying out risk profiling of investors/clients, the Noticee asks investors to choose the segment as well as specify the risk, the investor is willing to take/tolerate. The segment which investors want to trade and degree of risk as specified in RPF is given below: –

Table No. 5 

44. The Noticee has submitted that the aforesaid Table was placed in the RPF to gauge willingness to take risk and indicates the degree of risk that the client is interested in. I note that even before carrying out an independent risk profiling, the Noticee is obtaining confirmation from the investors, for the selection of segment and the degree of risk they are willing to take. Furthermore, if the Noticee expected its clients to declare the degree of risk as “Moderately High”, the same ought to have appeared in the Risk Score assigned to them. I also note that a loss averse/ risk averse investor/ client of the Noticee does not have the option in the aforesaid Table to indicate “low” as degree of risk they are willing to take, even though Risk Profile Score is classified into Low Category.

45. On perusal of the RPF submitted by the Noticee, I note that the Noticee has posed the following questions to the investors:

 Question no. 8

 Question no. 11

 Question no.12

46. I note that it is pertinent to refer to regulation 16(d)(i) of the IA Regulations which states that the investment advisor shall ensure that any questions or description in any questionnaire which is used to establish the risk a client is willing to take should be clear and not use double negative or such complex language that the client is unable to understand. The said regulation is reproduced below for reference:

 “Risk profiling.  

16. Investment adviser shall ensure that,-

                            …

…

…

(d) any questions or description in any questionnaires used to establish the risk a client is willing and able to take are fair, clear and not misleading, and should ensure that:

(i) questionnaire is not vague or use double negatives or in a complex language that the client may not understand;”

47. I note that question no. 8 of the RPF seeks answer to the question, “What is the first thought to cross your mind, when you invest your money?”, and the proposed answers that may be selected by the clients include the “It should not be turn out to be a bad investment” which is assigned two (2) marks and “This should turn out to be a good investment” which carries three (3) marks. I note that the former answer contains double negatives which is likely to mislead the clients. Furthermore, the latter answer i.e. “This should turn out to be a good investment” is similar to the former i.e. “It should not be turn out to be a bad investment”. I note that such similarity in answers is bound to create confusion and thereby mislead the client/ investors. Similarly, question no. 12 seeks answer to the question, “Would you invest in a company that underperformed in the past and caused you a loss?”. The options provided by the Noticee inter alia include “May be, but I am not sure” which has been assigned two (2) marks and “Perhaps I will” which carries three (3) marks. I note that the word “may be” and “perhaps” are synonymous and are used interchangeably in the normal parlance. I note that the options provided by the Noticee to the questions in the RPF are confusing and may mislead the investors.

48. Furthermore, question no. 8 asks “What is the first thought to cross your mind, when you invest your money?”. I note that any investor at the time of investing their money, will not like to lose money and will invest money based on its financial goals, future need of money etc. The return what an investor would get is based on the segment / product in which investment is made by him. If investor risk tolerance level is low, he would not invest in a risky product. As regards, question no. 12 mentioned, “Would you invest in a company that underperformed in the past and caused you a loss”. In this regard, I note that an investor will invest money only after considering, not only a company’s present but also past financials results, company management, company track records, shareholding pattern as well as present economic situation/ policy framed by competent authority etc. Generally, an investor would not invest in a company, whose financial conditions are deteriorating day by day and there is some corporate announcement which is not favorable to the company. Therefore, I note that the aforesaid questions are ambiguous in nature. 

49. I note that the SCN has alleged that the Noticee has assigned 12 marks out of 48 marks i.e. 25% weightage to the aforesaid vague questions/ misleading descriptions which is in violation of Regulation 16 (b) (iii) of the IA Regulations. Regulation 16 (b) (iii) of the IA Regulations states that an IA shall ensure that it does not attribute inappropriate weight to certain answers while assessing the client’s risk. The Noticee has stated that the said three questions are important to check the risk appetite of the investor and that if a conservative investor ticks ‘all low category answers’ he will get only 3 marks out of 12 which is a meagre 6.25% of the total marks of the questionnaire. From the preceding paragraph, I note that the options provided by the Noticee to the questions in the RPF are confusing and may mislead the investors, and the questions per se are ambiguous in nature. Furthermore, the said three ambiguous questions have been earmarked 25% of the total score and disproportionately high amount of weight has been assigned to only these three questions. Therefore, I am unable to accept the explanation provided by the Noticee.  

50. The Noticee in his reply and even during his submissions at the time of hearing has stated that it has used the risk profiling mechanism which is commonly used by companies such as Bajaj Finserv and IndusInd Bank. The Noticee has also submitted that question nos. 8, 11 and 12 have been taken from the ICICI Prudential Risk Profiling Questionnaire tool.

The Noticee has provided the aforesaid as annexures 13, 14 and 15 to his reply.  

51. Although the benchmark for RPFs are not set by the two of the entities cited by the noticee, a comparative perspective as proposed by noticee itself, the RPF of Bajaj Finserv, IndusInd Bank and the Noticee were perused. Given below is the comparative analysis, of the said RPFs:

Table No. 6

52. Having gone by the proposed comparison of the RPFs amongst others such as Bajaj Finserv, IndusInd Bank and the Noticee also, I note that none of the questions appearing in the RPF of Bajaj Finserv and IndusInd Bank are similar to those in the Noticee’s RPF.

Therefore, I am unable to agree with the Noticee’s submission that it has used the risk profiling mechanism which is commonly used by companies. 

53. As regards Noticee’s submission that question nos. 8, 11 and 12 have been taken from the ICICI Prudential Risk Profiling Questionnaire tool, I have perused Annexure 15 to the Noticee’s reply on which the Noticee has relied in his reply, and I note that it appears on the website of ICICI Prudential Mutual Fund as a Risk Profiling Tool for the investors to self- assess how much risk they can take. In this regard, I note that firstly, the risk profiling tool on the said website is for self – assessment by investors and secondly, the same is with respect to ICICI Prudential Mutual Fund. I note that the Noticee having NISM Certification on Investment Advisors ought to have noticed the same. 

54. In view of the above, I conclude that the Noticee has violated regulation 16(d)(i) and Regulation 16(b)(iii) of the IA Regulations.

55. I note that by requiring the investors/ clients to answer vague questions/ providing options containing double negatives, the Noticee was engaging in a practice that would operate as deceit upon the investors because the said three questions carry 25% weightage of the questionnaire and would result in ultimately categorizing the client as a Moderate Risk/ High Risk client for the purpose of providing investment advice for dealing in securities.

The relevant provisions of the SEBI Act and PFUTP provisions are as under: 

SEBI Act: 

Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control.  12A. No person shall directly or indirectly—

…

…

…

(c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder;

PFUTP Regulations:

3. Prohibition of certain dealings in securities No person shall directly or indirectly—

…

…

…

(d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under.

In view of the above, I find that the Noticee has violated Section 12A (c) of the SEBI Act read with Regulation 3 (d) of the PFUTP Regulations. 

Issue No. V: Whether the Noticee has failed to maintain records pertaining to risk profiling and risk assessment of the client in terms of Regulation 19 of the IA Regulations? 

56. The SCN has observed that the Noticee has alleged that the Noticee does not obtain any documents/ evidence from its clients while doing risk profiling of client and risk profiling is completed merely on the basis of telephonic conversation/ email received from clients. The SCN has also alleged that the Noticee has not collected any document to ascertain current income and other details for doing risk profiling of the client at the time of onboarding the clients. The relevant provision is reproduced as under:

“Maintenance of records.  

19. (1) An investment adviser shall maintain the following records,-

• Know Your Client records of the client;
• Risk profiling and risk assessment of the client;
• Suitability assessment of the advice being provided;
• Copies of agreements with clients, if any;
• Investment advice provided, whether written or oral;
• Rationale for arriving at investment advice, duly signed and dated; (g) A register or record containing list of the clients, the date of advice, nature of the advice, the products/securities in which advice was rendered and fee, if any charged for such advice. 

(2) All records shall be maintained either in physical or electronic form and preserved for a minimum period of five years:.…”

57. I note that the risk assessment also involves objective assessment of the client’s risk capacity which includes the maximum level of risk that a client can take based on their financial situation and would require the Noticee to maintain the records pertaining to the same.  

58. As regards proof of current income, the Noticee has stated that it used to request the clients to provide copies of Income Proof i.e. salary slip, bank statements etc., however, certain clients only provided self-attested risk profiling form sans the income proof. The Noticee has also submitted that Regulation 19 (1) does not mention that the information obtained should be backed by supporting documents.

59. I note from Client Investment Advisory Agreement (Annexure 16 to the Noticee’s reply) that in terms of Clause 2 titled “Mandatory Requirements from SEBI”, the Noticee had informed its clients that as per SEBI norms mentioned in the IA Regulations, 2013 and KYC Regulation, 2011, the Noticee would require self-attested documents from clients to maintain the records including KYC form, copy of PAN Card and Aadhar Card and income proof of client (salary slip, bank statement etc.) The Agreement also states that the said details are mandatory requirement for SEBI and failure to submit would be met with discontinuation of services until such details are obtained from the client. The aforesaid clearly shows that the Noticee was aware that it was required to maintain records such as income proof. In fact, Regulation 17 of the IA Regulations also state that IA has to follow a documented process for selecting investments based on client’s investment objectives and financial situation. Therefore, the Noticee’s contention that the regulations do not mention that the information obtained should be backed by supporting documents is incorrect and baseless.

60. The Noticee in his reply has stated that during inspection, the Noticee had provided SEBI’s Inspection Team with the documents of various clients and other documents such as PAN Card, Aadhar Card, address proof etc. However, I note that in response to Question No. 32 which read as “Please provide the details such as all invoices, email sent to the clients, KYC documents, supporting documents to ascertain income proof, call recordings, whatsapp chat, SMS log etc.”, the Noticee had responded that the information would be provided to SEBI – Indore Local Office within seven days. The submission of the Noticee is contradictory to his statement recorded on March 06, 2020. Therefore, I am unable to accept the Noticee’s submission that he had provided the requisite information to the SEBI Inspection Team during inspection itself.

61. In view of the above, I conclude that the Noticee was not maintaining records pertaining to risk profiling and risk assessment of its clients and therefore I find that the Noticee has violated regulation 19 (1) and 19 (2) of IA Regulations.

Issue No. VI: Whether the Noticee has deliberately devised multiple packages which are essentially offering same service to earn huge amount of service fees from its clients and thereby failed in its responsibility to act in fiduciary capacity to its clients in violation of regulation 15 (1) of IA Regulations and clauses 1, 2 and 6 of the Code of Conduct for Investment Advisors as specified in Schedule III of IA Regulations read with regulation 15 (9) of IA Regulations?

62. I note from the SCN and Annexure 5 thereto that the Noticee offers 33 types of different services to its clients in the following segments:

• Equity Segment
• Commodity Segment
• Indian Currency segment
• Comex Services
• Forex Services and
• Investment Planning

63. The products offered by Noticee are as under: Table No. 7

Table No. 8

Table No. 9

64. The SCN also provided a comparison Table of the services which is as under:

Table No. 10

65. From the aforesaid table, I note that the Noticee is offering two services namely Blue Chip (Cash) and Big Boys (Cash) in Cash segment which have exactly the same features viz. giving 28-35 trading calls per quarter to the clients with follow up message on each call, daily reports, etc. Despite having exactly similar offering in the aforementioned two services, the prices charged for them are different. For instance, the quarterly fees for Blue Chip (Cash) is Rs. 35,000 while the quarterly fees for Big Boys (Cash) it is Rs. 45,000.

66. The Noticee in his reply has submitted that in the Blue Chip (Cash) Services, the client gets advice regarding companies which have a record of paying continuous dividend whereas in Big Boy (Cash) Services, the recommendation is provided for which the price of the shares is more than Rs. 1,000/-. I note that The Palgrave Macmillan Dictionary of Finance, Investment and Banking defines “Blue Chip” as the common stock of a high quality company, generally one with a large market capitalization, established reputation and market share, and strong record of growth and earnings.^[1] According to the Book of Financial Terms, “Blue Chip” is understood as “a share of a company that is financially very sound, with an impressive track record of earnings and dividends, and which is highly regarded for its competent management and/ or services. Examples in India are Hindustan Lever etc.^[2] A blue chip company is generally understood to be one that gives continuous dividends, and perusal of the list of blue chip companies in India would show that most of these companies are traded at a price more than Rs. 1,000/-. I also note that the Noticee has not adduced any proof to show that the recommendations and/or scrips under the two services are different. In view of the above, I am unable to agree with the explanation provided by the Noticee.

67. The SCN also provided a comparison Table of the following four intra- day cash segment services which is as under:

Table No. 11

68. As regards ‘Morning Shiner (Cash)’ and ‘Intraday Bazooka (Cash)’ services, the Noticee has submitted that Morning Shiner caters to those clients who want to trade in early morning trading session and the Intraday Bazooka caters to clients who can trade throughout the day without any constraint. I note that the Noticee has not provided any proof that the clients subscribing to Intraday Bazooka do not receive advice pertaining to trading in the morning trading session. Therefore, I do not find the explanation provided by the Noticee convincing.

69. The Noticee has suggested that in the ‘Overnight Flame’ services are offered to clients who want to Buy Today and Sell Tomorrow whereas HNI Intraday Bazooka Cash are meant for high net worth investors who want to trade in market and the investment amount is Rs. 5 lakhs.

70. The relevant provisions of the IA Regulations, in this regard, are as under:

General responsibility.

 15. (1) An investment adviser shall act in a fiduciary capacity towards its clients and shall disclose all conflicts of interests as and when they arise.

THIRD SCHEDULE 

CODE OF CONDUCT FOR INVESTMENT ADVISER 

1. Honesty and  fairness – An investment adviser shall act honestly, fairly and in the best interests of its clients and in the integrity of the market. 

2. Diligence  – An investment adviser shall act with due skill, care and diligence in the best interests of its clients and shall ensure that its advice is offered after thorough analysis and taking into account available alternatives.

…

…

…

6. Fair and reasonable charges – An investment adviser advising a client may charge fees, subject to any ceiling as may be specified by the Board, if any. The investment adviser shall ensure that fees charged to the clients is fair and reasonable.

71. I note that the Black’s Law Dictionary defines “fiduciary relationship”^[3] as under:

“A relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship. Fiduciary relationships – such as trustee-beneficiary, guardian-ward, agent-principal, and attorney-client – require an unusually high degree of care. Fiduciary relationships usually arise in one of four situations : (1) when one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first, (2) when one person assumes control and responsibility over another, (3) when one person has a duty to act for or give advice to another on matters falling within the scope of the relationship, or (4) when there is a specific relationship that has traditionally been recognized as involving fiduciary duties, as with a lawyer and a client or a stockbroker and a customer.”

72. Furthermore, the Hon’ble Supreme Court in Central Board of Secondary Education and Anr. v. Adiya Bandopadhyay and Ors.^[4] observed as under:

“21. The term ‘fiduciary’ refers to a person having a duty to act for the benefit of another, showing good faith and condour, where such other person reposes trust and special confidence in the person owing or discharging the duty. The term ‘fiduciary relationship’ is used to describe a situation or transaction where one person (beneficiary) places complete confidence in another person (fiduciary) in regard to his affairs, business or transaction/s. The term also refers to a person who holds a thing in trust for another (beneficiary). The fiduciary is expected to act in confidence and for the benefit and advantage of the beneficiary, and use good faith and fairness in dealing with the beneficiary or the things belonging to the beneficiary….”

73. From the above, I note that an investment advisor has a duty to act for the benefit of his clients. However, in the facts of the present case, I note from paragraph nos. 64 to 68 that despite offering similar services, the Noticee is charging different prices (higher prices) for these services. I note that the Noticee has devised multiple packages (which are essentially offering same service) to earn huge amount of service fees from its clients.

74. Therefore, I find that the Noticee has failed in its responsibility to act in fiduciary capacity to its clients that is entrusted upon it under regulation 15 (1) of IA Regulations. The Noticee has also failed to abide by clauses 1, 2 and 6 of the Code of Conduct for Investment Advisors as specified in Schedule III of IA Regulations read with regulation 15 (9) of IA Regulations.

Issue No. VII: Whether the Noticee failed to communicate the risk profile and suitability assessment to clients and started investment advisory services without confirmation from client on Risk Profile and thereby violating regulation 16 (e) of IA Regulations? 

75. The SCN has observed that during the inspection, SEBI had sought information such as risk profiles, invoices, suitability assessment, KYC documents, products/ services sold, etc. for 41 sample clients from the Noticee. It was observed that Noticee has provided information for the following 15 clients only. However, the information provided by Noticee for the said 15 clients was also not complete in all respects. The below Table provides the details of the information submitted with respect to the said 15 clients.

Table No. 12

76. It was observed that during the course of inspection, it was informed by IA that subsequent to risk profiling, they had sent emails to clients, forwarding risk assessment, suitability investment report, KYC and FATCA declaration. IA had also informed that in the said email, Noticee had requested clients to check all the documents such as RPF, suitability investment report, KYC, etc. and acknowledge the same before starting the services. In this regard, I note that the Noticee has forwarded barely legible copies of emails sent to and received from the following clients/ clients. Nevertheless, on analysis of the same, I note that the Noticee has sent emails to his clients purportedly attaching copies of KYC, “RPM”, “Suitability Form” and “Investment Suitability Report”. I note in response to the same, the investors have replied stating “Ok”, “Acknowledge”. The details are as under: 

Table No. 13

77. The Noticee has also submitted a “Declaration Letter to Investment Advisor regarding suitability of advice as prescribed under SEBI (Investment Advisor) Regulations, 2013” with respect to the aforesaid clients wherein it is stated by the clients that the KYC and Risk Profiling has been communicated to them.

78. I note that the Noticee has provided copies of emails and the Declaration Letter only with respect to the aforesaid 7 clients instead of 41 clients for which the data was sought by the SEBI Inspection team. Furthermore, the Noticee has not adduced the RPF and Investment Suitability Report which was forwarded to the aforesaid 7 clients/ investors except that of Mr. Rajput Dineshkumar Jaiprakash Singh and another investor, Mr. Abhishek Rajannavar (whose name does not appear in Table no. 12). I note that in the absence of the supporting documents, I am unable to accept the Noticee’s contention that the same were communicated to the clients.

79. I note that the SCN has observed that the risk profiling of the clients was done telephonically or through email by Noticee without obtaining supporting documents to verify the authenticity of the documents submitted by investors. The SCN also observed that as the Noticee was not sending Risk profile form, scores of risk profile, Suitability Investment report etc. to its clients, it has failed to obtain confirmation from the clients whether products are suitable for them. As a result, the SCN has alleged that the clients have no understanding of its risk profile and products suitable for them.

80. I note that an IA shall ensure that the risk profile of the client is communicated to them after risk assessment is done in terms of regulation 16 (e) of the IA Regulations. Based on the above analysis in paragraph nos. 74 to 77, I find that the Noticee has failed to do the same and thereby violated regulation 16 (e) of the IA Regulations.

Issue No. VIII: Whether the Noticee provided Investment Advisory services prior to risk profiling thereby violating regulation 17(a) of IA Regulations, clauses 1, 2 and 4 of Code of Conduct as mentioned in Schedule III read with regulation 15(9) of IA Regulations and regulation 3(a), (b), (c), (d) and 4(1) of PFUTP Regulations read with section 12A(a), (b) and (c) of SEBI Act, 1992? 

81. The SCN has observed that the Noticee has sold products to the clients and charged advisory fees even before the risk profiling of the client was completed. In this regard, I note from the SCN that the details regarding the date of payment of fees, the services tenure date, date of carrying out risk profiling, etc. with respect to some of the sample clients/ complainants were provided as under:

Table No. 14

82. I note from the aforesaid table that the advisory services of Mr. Sanjeevi were started on July 06, 2018 and Risk profile was carried out on July 09, 2018. The Noticee has not submitted any response regarding the same. I am also cognizant of the fact that the aforesaid data only pertains to a sample size of 15 clients, and that there could be many more such instances where risk profiling was done after starting the services. It is relevant to mention here that details of 41 sample clients were sought from the Noticee, however, the Noticee itself has provided information pertaining to only the aforesaid 15 clients, as a result, SEBI could not further analyse and substantiate/ dismiss the charge citing more instances. 

83. I note that as per regulation 17(a) of IA Regulations, the IA has to ensure that all investments on which investment advice is provided is appropriate to the risk profile of the client. It is observed from the above mentioned table that Dollar had sold its advisory products and collected fees from the clients, at the time of risk profiling without receipt of confirmation from the clients regarding risk assigned and services sold, whether the services are appropriate based on his investment goal.

84. Therefore, I note that the Noticee was selling its products and charging advisory fees from the clients without undertaking risk profiling of client, and therefore, the Noticee has violated regulation 17(a) of IA Regulations. Further, on account of the above conduct, the Noticee has violated clauses 1, 2 and 4 of Code of Conduct as mentioned in Schedule III read with regulation 15(9) of IA Regulations.

85. I note that the Hon’ble Supreme Court in Kanaiyalal Baldevbhai Patel v. SEBI^[5] has observed that in the context of the PFUTP Regulations a trade practice may be unfair, if the conduct undermines the good faith dealings involved in the transaction. I note that the Noticee’s act of selling its products and charging advisory fees from the clients without undertaking risk profiling of client attracts regulation 4(1) of PFUTP Regulations which states that no person shall indulge in an unfair trade practice in securities market. 

Issue No. IX: Whether the Noticee has selected and sold package/ product/services without any regard to the financial situation, risk tolerance level/ loss absorbing capacity of the client violated regulations 15(1), 17(a), 17(d) and 17(e) of IA Regulations, Clauses 1, 2 and 6 of Code of Conduct as mentioned in Schedule III read with regulation 15(9) of IA Regulations and regulations 3(a), (b), (c) and (d) of PFUTP Regulations, 2003 read with section 12A(a), (b) and (c) of SEBI Act, 1992? 

86. I note from the SCN has alleged that the Noticee has selected and sold package/ product/services without any regard to the financial situation, risk tolerance level/ loss absorbing capacity of its clients. The SCN also alleged that the Noticee has also ignored the amount its clients are willing to invest as well as annual income of the clients while selling advisory products to the clients.

87. The Noticee has provided the RPF, Investment Suitability Report, Declaration Letter, KYC, Client Registration form of Mr. Srinivasa Raghu Chakravarthi. From the information submitted by the Noticee, I note as under:

• The client is senior citizen more than 75 years old (Date of Birth: October 03, 1946, service start date May 29, 2018). I note from the Enquiry Order that the fees of Rs. 8, 21,118/- was collected/ charged to client for selling various services as specified in below mentioned table:

Table No. 15

• I note that as per regulation 16 (b) of IA Regulations, the Noticee shall ensure that the IA has a process for assessing the risk a client is willing to take including assessing the client’s capacity for absorbing loss. I note that an investor’s loss absorbing capacity is dependent on several factors including the level of income of the client, age factor, number of dependents, present source of income, etc. At the age of 75, a person wants safety of his investments and certainty of cash flow. By nature, derivatives products are leveraged products. These products are considered as very risky in the financial world.  By selling products such as DAFS Point plan (Future), Big boys (Future), Blue Chip (Future), HNI Intraday Bazooka (Future), HNI Intraday Bazooka (Currency), HNI Intraday Bazooka (Option), Intraday (Option) to a senior citizen, it, prima-facie, appears that Dollar is misselling the products to its clients without making the senior citizen client understand the risk involved in it.
• I note from the client’s Investment Suitability Report that the Noticee has captured the client’s investment amount as more than Rs. 5 lakhs. I also note that as per the client’s KYC document submitted by the Noticee (Annexure 33C to its reply) which interestingly pertains to ECS Financial Services, wherein the client had submitted that he is retired person and his gross annual income is between Rs. 1 – 5 lakhs. I note that the the said KYC document should have raised a red flag for the Noticee and it ought to have asked the client to provide supporting income proof. I note that the Noticee failed to do so. Furthermore, I note from Table no. 15 that the Noticee has sold products meant for HNI to a client who claims his income is merely more than Rs. 5 lakhs.

88. The Noticee has stated that the information pertaining to process of Risk profiling of clients, Suitability Investment Reports and procedure for carrying out Risk Profiling was provided by the Noticee vide letter dated February 26, 2020 and produced the same as Annexure 32 to his reply. I have perused the said annexure and note that the letter dated February 26, 2020 is addressed to SEBI. I note that the letter states that a copy of sample risk profiling and suitability report are enclosed, however, I note that the said copies have not been annexed. Therefore, I am unable to conclude that the said information was provided by the Noticee on February 26, 2020.

89. The Noticee has also relied on a Declaration Letter wherein the clients have submitted that “I have understood the products/ services suggested to me and fully understood the risk involved in it.” In this regard, I note from the Enquiry Order that the investor/ client Mr. K Ramakrishna Prabhu vide email dated January 14, 2020 has stated that “…Through phone calls they forced, embarrassed, mislead and cheat in each and every way, though through mails, through Caution Note and Disclaimer (which they sent after maximum of the amount has been forcibly collected through phone calls for services on annual basis) they thrust all risk upon the client/ customer and desist from taking any responsibility for the huge losses incurred due to their irresponsible phone call advice. Likewise they have cheated in each and every respect even after collecting huge amount i.e. Rs. 7,57,672 by way of service charges for advisory services in various names.”

90. Based on the aforesaid, I note that the Noticee has selected and sold package/ product/services without any regard to the financial situation, risk tolerance level/ loss absorbing capacity of the client. I also note that the Noticee has also ignored the amount client is willing to invest as well as annual income of the client while selling advisory products to the clients. Furthermore, the Noticee has charged disproportionate/ unreasonable fees/ charges towards its services as compared to client’s income/ investment amount which indicates that the Noticee has not followed the requirement of suitability advice to its clients. I note that the Enquiry Order at paragraph no. 90 provides many more example wherefrom the aforementioned conclusion has been arrived at therein.

91. At this stage, it is pertinent to quote the relevant provisions of law:

General responsibility.

15. (1) An investment adviser shall act in a fiduciary capacity towards its clients and shall disclose all conflicts of interests as and when they arise.

Suitability.  

17. Investment adviser shall ensure that,-

(a) All investments on which investment advice is provided is appropriate to the risk profile of the client; 

• It has a reasonable basis for believing that a recommendation or transaction entered into:
  • meets the client’s investment objectives;
  • is such that the client is able to bear any related investment risks consistent with its investment objectives and risk tolerance;
  • is such that the client has the necessary experience and knowledge to understand the risks involved in the transaction.
• Whenever a recommendation is given to a client to purchase of a particular complex financial product, such recommendation or advice is based upon a reasonable assessment that the structure and risk reward profile of financial product is consistent with clients experience, knowledge, investment objectives, risk appetite and capacity for absorbing loss.

THIRD SCHEDULE

CODE OF CONDUCT FOR INVESTMENT ADVISER

1. Honesty and fairness

An investment adviser shall act honestly, fairly and in the best interests of its clients and in the integrity of the market.

2.Diligence

An investment adviser shall act with due skill, care and diligence in the best interests of its clients and shall ensure that its advice is offered afterthorough analysis and taking into account available alternatives.

…

…

…

6. Fair and reasonable charges

An investment adviser advising a client may charge fees, subject to any ceiling as may be specified by the Board. The investment adviser shall ensure that fees charged to the clients is fair and reasonable. 

SEBI Act: 

Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control.  12A. No person shall directly or indirectly—

…

…

…

(c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder;

PFUTP Regulations:

3. Prohibition of certain dealings in securities No person shall directly or indirectly—

…

…

…

(d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under.

92. In view of the above, I find that the Noticee has kept its own interest ahead of his clients’ interest and has failed to take due care and diligence to ascertain risk profile of the client and to offer them suitable advice. Therefore, I find that the Noticee has violated regulations 15(1), 17(a), 17(d) and 17(e) of IA Regulations read with Clauses 1, 2 and 6 of Code of Conduct as mentioned in Schedule III read with regulation 15(9) of IA Regulations. I find that the practice adopted by the Noticee noted at paragraph nos. 90 and 94 of the Enquiry Order, operates as deceit on its clients and therefore, is liable to attract liability under section 12A (c) of the SEBI Act read with Regulation 3 (d) of the PFUTP Regulations.

 Issue No. X: Whether the Noticee was charging Advisory fees before expiry of tenure of existing service/ collecting multiple payments in short period thereby violating regulation 3(a), (b), (c), (d) of PFUTP Regulations, 2003 read with section 12A(a), (b) and (c) of SEBI Act and clauses 1, 2 and 6 of Code of Conduct for Investment Advisers as provided in Third Schedule of IA Regulations read with regulation 15(9) of IA Regulations? 

93. The SCN has observed that the Noticee was selling the same advisory advisory products/services to the clients before completion of the tenure of the previous service. I note from the SCN (Annexure 8) that with respect to the client, Mr. Ram Krishna Prabhu, before the completion of tenure of earlier service, the same service was sold to the client repeatedly and payments were received by the Noticee much earlier than the beginning of the actual service period of the product. The detailed analysis for the said client is reproduced as under:

Table No. 21

94. From the aforesaid Table, I note that on February 02, 2019, the Noticee sold the service of Morning Shiners Cash twice for the period starting from February 05, 2019 to March 05, 2019 and for the period March 06, 2019 to April 08, 2020. Similarly, on March 16, 2019 and March 22, 2019, the Noticee had sold the package of HNI Intraday Bazooka (Future) to the client for the period starting from March 18, 2019 to April 18, 2019 and April 19, 2019 to June 18, 2019 respectively. Furthermore, on February 09, 2019 and on February 14, 2019, M2F Positional Cash services were sold for the period starting from February 11, 2019 to October 23, 2019 and October 24, 2019 to July 10, 2020 respectively. I note that even before completion of one service another service was sold which would commence after at a later period.

95. In addition to the above, I note that in the months of April, 2019 and May, 2019, the Noticee has sold the package of HNI Intraday Bazooka Future six times (three times for each month) to the client for the service period starting from June 19, 2019 till December 10, 2019. Similarly, in the months of June 2019 and July 2019, the Noticee had sold the same service i.e. HNI Intraday Bazooka Future to the same client twice, the service periods of which extended up to February, 2020. I note that even before completion of tenure of earlier service, same service was sold to client repeatedly and payments were received by the Noticee in lieu of the same in advance.

96. The Noticee in his reply as regards, the Morning Shiner services, the Noticee has submitted that the client paid Rs. 6,608 and Rs. 50,000/- on February 02, 2019, as a discount was being offered on the services wherein Rs. 56,008/- would be payable by the client for a service period of 14 months. The Noticee has also submitted that as the client paid the amount in two separate instalments, separate bills were generated. However, I note that the Noticee has not produced any email/ communication sent by the Noticee conveying that such a discount package is being offered on the Morning Shiner services and acceptance of the same by the client. In the absence of the same, I am unable to agree with the Noticee’s contention that the payment was for a discounted service of 14 months. Furthermore, I note that the payment of Rs. 6,608 and Rs. 50,000/- was made on the same day i.e. on February 02, 2019, and if the payment was received in lieu of the same service for 14 months, I am unable to understand the necessity of generating two invoices. 

97. As regards the services of M2F Positional Call, the Noticee has submitted that the client wanted to subscribe to positional services in Cash, Futures and Options segment. The three services were provided to the client but billed under M2F Positional Cash. The Noticee has provided only a copy of email dated February 14, 2019 wherein the details of Noticee’s M2F services with respect to Cash, Futures and Options segment was provided. However, I note that the Noticee has failed to provide proof of acceptance of the same by the client as provided with respect to the HNI Intraday Futures & Options segment (Annexure 38 of its reply). In view of the above, I note that the Noticee’s contention that all the three services were provided to the client but billed under M2F Positional Cash is not convincing.

98. I also note from the Enquiry Order that the client/ complainant, Mr. Ram Krishna Prabhu in his email dated January 14, 2020 has stated that the Noticee’s representatives would force him to make payments in lieu of the services/ packages offered by it. Furthermore, the complainant has stated despite taking large sums of money from him, the Noticee discontinued his services in September 2019, which ought to have been provided till July 2020. The extract of the email is reproduced as under:

“Atleast before 3 or 4 days to every payments (sic), the executives from this treacherous Dollar Advisory, used to call from any of the below numbers to my mobile no. ******7709 and force, embarrass me to pay the hefty amount of service charges immediately, call duration ranging from 20 minutes to 45 minutes…. They had stopped trading advice service through phone call from 06-09-2019 onwards. According to the invoices their services should have been continued till: Trading in Cash till 08-04-2022 and Trading in M2F Position Cash – Till 10-07-2020.”

99. I note that the Noticee has adduced a satisfaction letter dated February 26, 2019 received from the client, Mr. Ram Krishna Prabhu wherein it has been stated that “I am satisfied with the services provided by you. I am getting services as per my choice and I don’t have any doubt in that. I know that execution of services will solely be my responsibility. I know very well that investment in markets are full of risk, but I also know that market are potential too.” I note from Annexure 34 to the Noticee’s reply that on February 26, 2019, the Customer Care team of the Noticee provided the sample Satisfaction letter to the client vide email sent at 01:30 PM. Vide his reply dated February 26, 2019, the client provided scanned copy of the signed Satisfaction Letter regarding the services at 05:01 PM. I note from the Enquiry Order that by February 26, 2019, the client had made a payment of Rs. 2,97,309/-. I note that having paid a considerable amount to the Noticee, any investor would be in a vulnerable position and therefore, presumably the client, Mr. Ram Krishna Prabhu immediately on the same day provided the Satisfaction Letter to the Noticee when the same was sought from him. Therefore, the reliance of the Noticee on the Satisfaction Letter is on a weak ground and cannot be accepted in light of the contents of the email forwarded by the complainant to SEBI. 

100. I also find that Noticee has failed to act honestly, fairly and diligently while dealing with clients. Hence, I conclude that Noticee has violated clauses 1, 2 and 6 of Code of Conduct for Investment Advisers as provided in Third Schedule of IA Regulations read with regulation 15(9) of IA Regulations.

101. I find that the Noticee’s practice, more specifically described at paragraph nos. 96 to 101 operate as deceit upon its clients and therefore, operates as deceit on its clients and therefore, is liable to attract liability under section 12A (c) of the SEBI Act read with Regulation 3 (d) of the PFUTP Regulations.

Issue No. XI: Whether the Noticee failed to comply with the SEBI Circulars in relation to compliance with provisions of the Prevention of Money Laundering Act and Anti Money Laundering Guidelines? 

 102. SEBI introduced the “Guidelines on Anti Money Laundering Standards” vide Circular dated January 14, 2006 bearing no. ISD/CIR/RR/AML/1/06 for all intermediaries registered with SEBI under section 12 of the SEBI Act. In terms of Clause 4 of the said Circular, all intermediaries have been advised to ensure that a proper policy framework as per the Guidelines on anti-money laundering measures is put into place within one month from the date of the circular. The intermediaries have also been advised to designate an officer as ‘Principal Officer’ who would be responsible for ensuring compliance of the provisions of the The Prevention of Money Laundering Act, 2002 (hereinafter referred to as “PMLA”). The Circular also stipulates that the names, designation and addresses (including e-mail addresses) of ‘Principal Officer’ shall also be intimated to the Office of the Director-Financial Intelligence Unit (hereinafter referred to as “FIU”), 6th Floor, Hotel Samrat, Chanakyapuri, New Delhi -110021, India on an immediate basis.

103. The Noticee vide email dated March 03, 2020 (Annexure 9 to the SCN), submitted that Mr. Ravi Mohta, proprietor of Dollar was appointed as Principal Officer and intimation regarding the same was sent to FIU on August 09, 2018. I note that the Noticee was granted certificate of registration as investment adviser on December 28, 2015. Therefore, I note that there was a considerable delay of 955 days i.e. (from date of registration as IA December 28, 2015 to date of appointment of Principal Officer on August 09, 2018) in appointment of Principal Officer and the communication of the same to FIU. I find that the same is in violation of provisions of SEBI Circular ISD/CIR/RR/AML/1/06 dated January 18, 2006 read with SEBI Master Circular dated December 31, 2010 and SEBI Master Circular dated July 04, 2018.

104. I note that SEBI vide Circular CIR/MIRSD/1/2014 dated March 12, 2014 amended the SEBI Master Circular dated December 31, 2010 whereby Clause 14.2 was inserted and the same is reproduced as under:

14.2 Appointment of a Designated Director

i. In addition to the existing requirement of designation of a Principal Officer, the registered intermediaries shall also designate a person as a ‘Designated Director’. In terms of Rule 2 (ba) of the PML Rules, the definition of a Designated Director reads as under:

“Designated Director means a person designated by the reporting entity to ensure overall compliance with the obligations imposed under chapter IV of the Act and the Rules and includes — 

• the Managing Director or a Whole-time Director duly authorized by the Board of Directors if the reporting entity is a company,
• the managing partner if the reporting entity is a partnership firm,
• the proprietor if the reporting entity is a proprietorship concern, (iv) the managing trustee if the reporting entity is a trust,
• a person or individual, as the case may be, who controls and manages the affairs of the reporting entity if the reporting entity is an unincorporated association or a body of individuals, and
• such other person or class of persons as may be notified by the Government if the reporting entity does not fall in any of the categories above.

ii. In terms of Section 13 (2) of the PML Act (as amended by the Prevention of Money-laundering (Amendment) Act, 2012), the Director, FIU-IND can take appropriate action, including levying monetary penalty, on the Designated Director for failure of the intermediary to comply with any of its AML/CFT obligations.”

105. I note from Annexure 10 to the SCN that the Noticee vide email dated March 03, 2020 has stated that he is forwarding the details of designated director as submitted to FIU. However, on perusal of the trailing email dated July 20, 2018 addressed to FIU, I note that the same is titled “online applications for Reporting entity registration”. Furthermore, the attachment to the said email dated March 03, 2020 is also in connection with reporting entity registration request. I note that the Noticee has failed to designate a person as a “Designated Director” and therefore, I find that the Noticee has violated SEBI vide Circular CIR/MIRSD/1/2014 dated March 12, 2014. 

106. I note that in terms of SEBI Circular dated January 14, 2006 bearing no. ISD/CIR/RR/AML/1/06, all intermediaries registered with have been advised to ensure that a proper policy framework as per the Guidelines on anti-money laundering measures is put into place within one month from the date of the circular. Vide email dated March 02, 2020 and March 03, 2020, the Noticee was asked to furnish details with regard to PMLA policy, date of training, subject of training, number of participants, materials distributed, attendance sheet of employees, etc. The said information was also sought from the Noticee on March 06, 2020 during recording of his statement on oath wherein the Noticee had undertaken to submit its PMLA policy within seven days. Further, vide emails dated March 17, 2020 and March 24, 2020, the Noticee was again advised to furnish the details in this regard. I note that it is only in response to the SCN that the Noticee vide its reply dated June 23, 2022 (Annexure 40) has provided its “Anti – Money Laundering Policy”. I note that sufficient time had elapsed since the time the PMLA policy was sought by the Noticee and the same was provided by the Noticee after the lapse of a long period. Therefore, I am unable to believe that the Noticee had a policy framework in place in connection with PMLA policy and SEBI Circular. Therefore, I find that the Noticee has violated SEBI Circular dated January 14, 2006 bearing no. ISD/CIR/RR/AML/1/06 read with SEBI Master circular dated December 19, 2008, as amended vide SEBI Master Circular dated February 12, 2010, December 31, 2010, July 4, 2018 and October 15, 2019, w.r.t. Guidelines on Anti Money Laundering measures.

107. I note that as per Clause 13.2 of the SEBI Master Circular ISD/AML/CIR-1/2008 dated December 19, 2008, all intermediaries are required to provide training to employees with respect to Anti-Money Laundering (hereinafter referred to as “AML”) and Combating Financing of Terrorism (hereinafter referred to as “CFT”) procedures.

13.2. Employees’ Training 

Intermediaries must have an ongoing employee training programme so that the members of the staff are adequately trained in AML and CFT procedures. Training requirements should have specific focuses for frontline staff, back office staff, compliance staff, risk management staff and staff dealing with new customers. It is crucial that all those concerned fully understand the rationale behind these guidelines, obligations and requirements, implement them consistently and are sensitive to the risks of their systems being misused by unscrupulous elements.

108. The Noticee has submitted that it has followed provisions related to PMLA/ AML. In this regard, the Noticee has submitted that at the time of training and induction of the employees, training pertaining to the provisions of PMLA and AML was also provided. The Noticee has relied on Annexure 39 to his reply which contains an “Employment Declaration” on a non-judicial stamp paper of value of Rs. 100/- of one Mr. Sandeep Kumar Malviya who is purportedly appointed as a “FM”. The Noticee has relied on point no. 8 therein which stated that “I will report immediately to management if I found any suspicious details from client or other employee in terms of money laundering or terrorist activity or illegal monetary transactions.” I note that the Non – Judicial Stamp Paper neither contains the inked stamp carrying the “Serial Number & Date” nor the details of the vendor providing the non – judicial stamp paper. Furthermore, I note from the list of employees forwarded by the Noticee vide email dated February 19, 2020, that the name of Mr. Sandeep Kumar Malviya does not appear as an employee in the said list. Therefore, the reliability of the said document is questionable. The Noticee has also provided letter of appointment of one Ms. Sapna Kotiya as Senior Team Member. The said letter has enclosures viz., Service Agreement, Terms and Conditions of Employment, Employee’s Compensation and Summary of terms and conditions. Clause 17 of the Terms and Conditions of Employment titled “General Conditions of Work” therein states that “The employee will report immediately to management if he found any suspicious details from client or other employee in terms of money laundering or terrorist activity or illegal monetary transactions.” In this regard, I note that the SEBI Circular dated January 18, 2006 states that every intermediary including investment adviser shall have to maintain a record of all the transactions; the nature and value of which has been prescribed in the Rules notified under the PMLA. Such transactions include: (a) all cash transactions of the value of more than Rs 10 lakhs or its equivalent in foreign currency, (b) all series of cash transactions integrally connected to each other which have been valued below Rs 10 lakhs or its equivalent in foreign currency where such series of transactions take place within one calendar month and (c) all suspicious transactions whether or not made in cash. Furthermore, implementation of AML/CFT measures requires intermediaries to demand certain information from investors which may be of personal nature such as documents evidencing source of funds/income tax returns/bank records etc. The aforesaid Clause 17 of the Terms and Conditions of Employment does not capture the essence of the Circulars mentioned hereinabove, and cannot be said to be a substitute for a training programme as mandated under Clause 13.2 of the SEBI Master Circular ISD/AML/CIR-1/2008 dated December 19, 2008. 

109. I find it is relevant to reproduce Clauses 8 and 9 of Code of Conduct for Investment Advisers as mentioned in Schedule III of IA Regulations:

“8. Compliance  

An investment adviser including its representative(s) shall comply with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of clients and the integrity of the market.

9. Responsibility of senior management

The senior management of a body corporate which is registered as investment adviser shall bear primary responsibility for ensuring the maintenance of appropriate standards of conduct and adherence to proper procedures by the body corporate.”

110. In view of the above, I find that the Noticee has violated SEBI Circular ISD/CIR/RR/AML/1/06 dated January 18, 2006 and Circular CIR/MIRSD/1/2014 dated March 12, 2014 read with SEBI Master Circular ISD/AML/CIR-1/2008 dated December 19, 2008, SEBI Master Circular dated December 31, 2010 and SEBI Master Circular dated July 04, 2018, read with Clauses 8 and 9 of Code of Conduct for Investment Advisers as mentioned in Schedule III of IA Regulations read with regulation 15(9) of IA Regulations.

Issue No. XII: Whether the Noticee failed to redress the grievances of investors and thereby violated SEBI Circular CIR/OIAE/2014 dated December 18, 2014 and regulation 21(1) of IA Regulations?

 111. I note that Regulation 21 (1) of the IA Regulations states that an IA shall redress client grievances promptly. I also note that SEBI vide Circular CIR/OIAE/2014 dated December 18, 2014 titled “Redressal of Investor grievances through SEBI Complaints Redress System(SCORES) Platform” states that SEBI registered intermediaries, to whom complaints are forwarded through SCORES, shall take immediate efforts on receipt of a complaint, for its resolution, within thirty days. Further, the said circular has stated that in case of failure by SEBI registered intermediaries to file Action Taken Report (hereinafter referred to as “ATR”) under SCORES within thirty days of date of receipt of the grievance, it shall be treated as failure to furnish information to SEBI and deemed to constitute nonredressal of investor grievance.

112. I note that as on March 02, 2020, 10 unique complaints were pending on SCORES portal.

The summary of the complaints is given below: 

Table No. 22

113. Out of the said 10 complaints, I note that with respect to 3 complaints, the Noticee had filed the ATR (first reply) after more than 30 days. The details of complaints along with the ATR is as under:

Table No. 23

114. I note that the Noticee in his reply has stated that the complaint at sr. no. 1 was being resolved. In case of complaint at sr. no. 2, the Noticee has stated that the complainant’s previous two complaints had been resolved and the complaint in the table above was his third complaint. As regards the complaint at sr. no. 3, the Noticee has submitted that there was a delay as the Noticee’s office was not fully operational.

115. The Noticee has submitted that vide emails dated January 09, 2020 and March 09, 2020, the Noticee sought SEBI’s guidance as regards provisions of regulation 21 (4) of the IA Regulations. I note that regulation 21 (4) of the IA Regulations states that any dispute between the investment adviser and his client may inter alia be resolved through arbitration. On perusal of the agreements entered into between the Noticee and its clients (Annexure 5 to the Noticee’s reply), I note that the said agreements do not contain an arbitration clause to enable the parties to settle their disputes through arbitration. However, I note that the fact the Noticee sent the aforesaid emails seeking guidance on arbitration reflects the willingness of the Noticee to redress its investors’ grievances.

116. In view of aforesaid observations, I am inclined to take a lenient view in the matter and therefore, I am unable to agree with the allegation in the SCN that the Noticee has violated

SEBI Circular CIR/OIAE/2014 dated December 18, 2014 and regulation 21(1) of IA Regulations.

Issue No. XIII: Whether the Noticee traded on behalf of its clients and thereby violated regulation 15(1), clauses 1 and 2 of Code of Conduct as specified under Third Schedule read with Regulation 15(9) of IA Regulations? 

 117. The SCN has observed that an IA is in the business of providing investment advice in respect of securities and investment products, and that it is outside the scope of its activities to trade on behalf of its clients. In view of the dealings of the Noticee with respect to trading on behalf of its client, the SCN has alleged that the Noticee has violated regulation 15(1), clauses 1 and 2 of Code of Conduct as specified under Third Schedule read with Regulation 15(9) of IA Regulations. 

118. In this regard, I note that from the call records (Annexure 12 to the SCN) provided by the complainant Shri K. Nayeem Taj that the Noticee has traded on their behalf. The following is the transcript reproduction of one of the call recording between Client- Mr. K. Nayeem Taj and representative of Dollar namely Ms. Gareema:

Table No. 24

* Call recording named D.A. Gareema Service plan- Call Time- 1.27 to 2.12

119. The Noticee has relied on the SMS log report and email dated March 07, 2018 sent to the client, Mr. Nayeem Taj and stated that the said introductory SMSs and email carry a disclaimer that the Noticee is not offering execution based services and that the Noticee will not be responsible for execution of its services/ advice. The Noticee has also stated that the call recording does not contain the date and time of the respective call. I note that apart from the aforesaid, the Noticee has not refuted the contents of the call recording. I have gone through the call recording provided in a Compact Disc to the Noticee as Annexure 12 to the SCN and note that when the asked as to who is punching the trades on behalf of the client, Mr. Nayeem Taj, the representative has stated that the same is being done from the office of the Noticee as per the client’s request. I note from the disclaimer in the SMSs and emails sent to the client that the Noticee is aware that he is not supposed to trade on behalf of Noticees. Despite the same the Noticee has traded from the trading accounts of its clients. 

120. Further, I note from the SCN that in order to substantiate and ascertain the aforesaid observation, trade details of the complainants were sought from the stock brokers. It may be noted here that these clients are located across India but on analyzing the trade details received, it was observed that the Demat/broking accounts of some of these clients were accessed from Indore, Madhya Pradesh where the office of the Noticee is located. I note that the IP address from where the transactions have taken place in all the instances is 150.129.145.78. The Noticee in his reply has admitted that it uses one Static IP address of 150.129.145.78. Therefore, I have no doubt in holding that the trades in the account of the clients have been carried out by the Noticee.

121. Trades from the account of the client, Mr. Vikram Ahir have been carried out between February 02, 2018 to May 16, 2019. One such IP address was 150.129.145.78 which the Noticee has admitted is a Static IP address that it uses. Therefore, I find that the trades in the account of Mr. Vikram Ahir were carried out by the Noticee.

122. The Noticee in his reply has stated that with the introductory emails and SMS, the Noticee informs each and every client not to share their demat account or bank account credentials. The Noticee has also stated that its employees through their appointment letter are informed that they shall never ask any confidential information such as bank’s ID, password, PIN etc., from the clients. The Noticee’s has submitted that even in its disclaimer email, the Noticee recorded that it will not be responsible for execution and wrong interpretation of advice and recommendation. I note that the reply of the Noticee only deals with its standard operating procedures on paper, however, I note that the Noticee has not made submissions regarding the trades that have taken place from its IP address. 

123. In view of the above, I conclude that the Noticee has violated regulation 15(1), clauses 1 and 2 of Code of Conduct as specified under Third Schedule read with Regulation 15(9) of IA Regulations.

Issue No. XIV: Whether the Noticee failed to comply with SEBI Circular dated December 27, 2019?

124. The SCN has observed that Noticee violated Clause 1.1. of SEBI Circular no. SEBI/HO/IMD/DF1/CIR/P/2019/169 dated December 27, 2019. The relevant provisions of the said Circular are reproduced as under:

1. Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (IA Regulations) provides for code of conduct to be followed by IAs. In order to further strengthen the conduct of IAs, while providing investment advice and to protect the interest of investors seeking their advice, the IAs shall comply with the following:

(i)  Restriction on free trial 

As per SEBI (Investment Advisers) Regulations, 2013, investment advice can be given after completing risk profiling of the client and ensuring suitability of the product. It has come to the notice that IAs are providing advice on free trial basis without considering risk profile of the client. Hence the IAs shall not provide free trial for any products/services to prospective clients. Further, IAs shall not accept part payments (where some part of the fee is paid in advance) for any product/service.

125. From the screenshot of the website of the Noticee as on April 29, 2020 (Annexure 14 to the SCN), I note that the same displayed that the Noticee was providing facility of two days’ free trial to its prospective clients. However, the Noticee has submitted that on boarding of new clients had stopped since September 2019 and the same was communicated to SEBI vide email dated January 04 2020. In the said email, the Noticee had attached a copy of the screenshot of its website wherein the following message is displayed:

“Respected Client

This is to inform to all clients of Dollar Advisory and Financial Services that our Firm is not accepting fees in form of renewals after completion of your services. Please do not deposit/ pay any amount for renewal of services. We are not accepting any payments from our Old/ New Client as well….”

126. In view of the above, I am unable to agree with the allegation raised in SCN that the Noticee has violated Clause 1.1. of SEBI Circular no. SEBI/HO/IMD/DF1/CIR/P/2019/169 dated December 27, 2019. 

127. The Noticee in his reply has placed reliance on the orders of Hon’ble Securities Appellate Tribunal (hereinafter referred to as “SAT”) in the following appeals wherein the Hon’ble SAT has observed that the purpose of carrying out an inspection is not punitive and the object is to make the intermediary comply with the procedural requirements and that minor discrepancies, irregularities are not culpable: 

• Religare Securities Limited vs. SEBI (Appeal No. 23 of 2011, date of order – June 16, 2011)
• UPSE Securities Limited vs. SEBI (Appeal No. 109 of 2011, date of order – July 25, 2011)
• DSE Financial Services Limited vs. SEBI (Appeal No. 153 of 2012, date of order – September 11, 2012)

128. In this regard, I am inclined to reproduce the relevant portion of the order of the Hon’ble SAT in Religare Securities Limited SEBI:

“5. It must be remembered that the purpose of carrying out inspection is not punitive and the object is to make the intermediary comply with the procedural requirements in regard to the maintenance of records. We also cannot lose sight of the fact that every minor discrepancy/irregularity found during the course of inspection is not culpable and the object of the inspection could well be achieved by pointing out the irregularities/deficiencies to the intermediary at the time of inspection and making it compliant. This will, of course, depend on the nature of the irregularity noticed and we hasten to add a caveat that it is not being suggested that if any serious lapse is found during the course of the inspection, the Board should not proceed against the delinquent.”

129. I note that in the aforesaid order relied upon by the Noticee, the Hon’ble SAT itself has added a caveat to the effect that SEBI is not precluded from taking action against a delinquent in case of serious lapses. The Hon’ble SAT in UPSE Securities Limited vs. SEBI has also observed that if any serious lapse is discovered, it would always be open to the Board to take penal action in accordance with law. From the preceding paragraphs, I note that the Noticee has carried out the following violations which ought to be considered serious in nature:

• At the time of Risk Profiling, by requiring the investors/ clients to answer vague questions/ providing options containing double negatives, the Noticee engaged in a practice that would operate as deceit upon the investors.
• Noticee has failed to communicate the client’s risk profile to them.
• Noticee has devised multiple packages (which are essentially offering same service) and is offering the same at different prices to earn huge amount of service fees from its clients.
• Noticee’s act of selling its products and charging advisory fees from the clients without undertaking risk profiling of client attracts regulation 4(1) of PFUTP Regulations which states that no person shall indulge in an unfair trade practice in securities market.
• Noticee has selected and sold package/ product/services without any regard to the financial situation, risk tolerance level/ loss absorbing capacity of the client. The Noticee has also ignored the amount, the client is willing to invest as well as annual income of the client while selling advisory products to the clients. Furthermore, the Noticee has charged disproportionate/ unreasonable fees/ charges towards its services as compared to client’s income/ investment amount which indicates that Dollar has not followed the requirement of suitability advice to its clients.
• Noticee’s act of selling same advisory products/services to the clients before completion of the tenure of the previous service with the purpose of defrauding the clients and to earn maximum fees is in violation of PFUTP Regulations which states that no person shall indulge in an unfair trade practice in securities market.
• The Noticee has traded from the trading accounts of its clients.

130. Therefore, I note that the Noticee’s case cannot be considered leniently as there have been major lapses/ violations committed by the Noticee. In view of the same, I note that the Noticee’s reliance on the aforesaid judgments of the Hon’ble SAT is misplaced. 

131. The Noticee has relied on the order of the Hon’ble SAT in Piramal Enterprises Limited SEBI (Appeal No. 466 of 2016, date of Order – May 15, 2019) wherein the Hon’ble SAT has observed that imposition of penalty even meagre will leave an indelible mark and leave a blot on the appellant’s spotless image. The Hon’ble SAT also observed that if there is an infraction of a rule, remedial measures should be taken in the first instance and not punitive. However, in the present matter, the Noticee has committed grave and serious violations which cannot be remedied through mere warning. 

132. In view of the aforesaid violations committed by the Noticees, I find that directions under Sections 11(1), 11 (4), 11B (1), 11 B (2) and sections 11(4A) and 11B (2) read with section 15HA, 15HB (for violations prior to March 08, 2019) and 15EB (for violations prior to March 08, 2019) of the Securities and Exchange Board of India Act, 1992, need to be issued.

133. I note that in the case of Shri C. Paranitharan and Others and Trend Market Advisory Services, SEBI had passed orders dated July 05, 2022 and July 07, 2022, respectively, inter alia directing the Noticees therein to refund the fees or consideration received from investors in respect of their unregistered investment advisory activities. In the respective appeals filed against these orders by the respective Noticees, Hon’ble SAT vide common order dated September 21, 2022 inter alia directed the appellants therein to deposit the balance amount after making refunds to investors, with SEBI. It was also directed that the balance amount deposited with SEBI shall be kept in escrow account for a period of one year and be distributed to any claimants and thereafter, the remaining amount, if any, will be deposited in the Investor Protection and Education Fund.

134. Further, before going ahead with the determination of monetary penalty, it would be relevant to place hereunder the extracts of the appropriate penalty provisions for facility:

Penalty for default in case of investment adviser and research analyst. 

Section 15EB of the SEBI Act. “Where an investment adviser or a research analyst fails to comply with the regulations made by the Board or directions issued by the Board, such investment adviser or research analyst shall be liable to penalty which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees.”

Penalty for fraudulent and unfair trade practices. 

Section 15HA of SEBI Act, 1992: “Penalty for fraudulent and unfair trade practices. 15HA. If any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a penalty which shall not be less than five”

Penalty for contravention where no separate penalty has been provided. 

Section 15HB of SEBI Act, 1992. “Whoever fails to comply with any provision of this Act, the rules or the regulations made or directions issued by the Board thereunder for which no separate penalty has been provided, shall be liable to a penalty which shall not be less than one lakh rupees but which may extend to one crore rupees.”

135. It is relevant to mention here that for the imposition of penalty under the provisions of the SEBI Act, 1992, guidance is provided by Section 15J of the SEBI Act,1992. The said provision is reproduced as under:

“Factors to be taken into account while adjudging quantum of penalty. 

15J. While adjudging quantum of penalty under 15-I or section 11 or section 11B, the Board or the adjudicating officer shall have due regard to the following factors, namely: — 

• the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default;
• the amount of loss caused to an investor or group of investors as a result of the default;
• the repetitive nature of the default.

Explanation. —For the removal of doubts, it is clarified that the power to adjudge the quantum of penalty under sections 15A to 15E, clauses (b) and (c) of section 15F, 15G, 15H and 15HA shall be and shall always be deemed to have been exercised under the provisions of this section.”

136. I also note that the SCN has not brought out the quantum of profit/gains made by the Noticee excess fees by offering multiple packages. I, though, note from the complaints received from the clients that certain investors have suffered losses due to the actions of the Noticee. 

137. I have also noted that the certificate of registration of the Noticee as an Investment Advisor has been cancelled vide Enquiry Order. Upon consideration of the all the above factors, I shall now proceed with the directions and imposition of monetary penalties.

DIRECTIONS AND MONETARY PENALTIES 

138. In view of the foregoing, I, in exercise of the powers conferred upon me in terms Sections 11(1), 11(4) and 11B (1), 11B (2) read with of Section 19 of the SEBI Act, read with Regulation 28 of IA Regulations and Rule 5 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995, do hereby pass the following directions:

A. The Noticee, Dollar Advisory and Financial Services (Proprietor: Mr. Ravi Prakash Mohta), shall within a period of three months from the date of coming into force of this Order, refund the money received from any complainants /investors /clients, as fees /consideration or in any other form, in the following manner:

i. The Noticee shall resolve/ redress all pending complaints as on the date of passing of this Order and refund the money due/ payable to such complainants.

ii. The Noticee shall refund the amounts collected as fees from his clients/ complainants/ investors after adjusting the charges for services rendered by it, including the excess amount charged to such clients/ complainants/ investors, as the case may be.

B. The Noticee shall be responsible to issue public notice in all editions of two National Dailies (one English and one Hindi) and in one local daily with wide circulation, detailing the modalities for refund, including the details of contact person such as names, addresses and contact details, within 15 days of coming into force of this direction;

C. The repayments to the complainants /investors /clients shall be effected only through Bank Demand Draft or Pay Order or electronic fund transfer or through any other appropriate banking channels (and not cash transfers), which ensures audit trails to identify the beneficiaries of repayments;

D. After completing the refunds as directed in paragraph no. 137 (A), within a period of 15 days, the Noticee shall file a report detailing the amount refunded with SEBI, addressed to the “Division Chief, Division of Post–Inspection Enforcement Action, Market Intermediaries Regulation and Supervision Department, SEBI Bhavan II, Plot No. C7, G Block, Bandra Kurla Complex, Bandra (East) Mumbai– 400051”. The report shall be duly certified by an independent Chartered Accountant and indicate the amount, mode of payment, name of the parties refunded, communication address, mobile numbers and telephone numbers etc.;

E. The remaining balance amount, if any, which could not be refunded to the investors/ complainants/ clients, for any reason whatsoever, shall be deposited with SEBI which will be kept in an escrow account for a period of one year for distribution to clients/complainants/investors who were availing the investment advisory services from the Noticee. Thereafter, remaining amount if any, will be deposited in the Investor Protection and Education Fund maintained by SEBI;

F. Until the report as mentioned in paragraph no. 137 (D) is filed with SEBI, the Noticee is prevented from selling his assets, properties and holding of mutual funds /shares /securities held by him in demat and physical form except for the sole purpose of making the refunds as directed above. Further, banks are directed to allow debit only for the purpose of making refunds to the Complainants /investors /clients who were availing the investment advisory services from the Noticee, as directed in this Order, from the bank accounts of the Noticee;

G. The Noticee is debarred from accessing the securities market, directly or indirectly and is prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in any manner whatsoever, for a period of 6 months from the date of this Order or till the expiry of 6 months from the date of completion of refunds to complainants /investors /clients as directed in paragraph A above, whichever is later;

H. The direction for refund and depositing the balance amount with SEBI, as given in paragraph no. A and E above, does not preclude the clients/investors to pursue the other legal remedies available to them under any other law, against the Noticees for refund of money or deficiency in service before any appropriate forum/ authority of competent jurisdiction.

I. The Noticee is hereby imposed with, the monetary penalties, as provided hereunder:

J. The Noticee shall remit / pay the said amount of penalties within forty- five (45) days from the date of receipt of this order. The Noticee shall remit / pay the said amount of penalties through either by way of Demand Draft in favour of “SEBI -Penalties Remittable to Government of India”, payable at Mumbai, or through online payment facility available on the website of SEBI, i.e. www.sebi.gov.in on the following path, by clicking on the payment link: ENFORCEMENT -> Orders -> Orders of Chairman/ Members -> PAY NOW. In case of any difficulties in online payment of penalties, the said Noticees may contact support at [email protected]. The demand draft or the details/ confirmation of e-payment should be sent to “The Division Chief, Division of Post-Inspection Enforcement Action, Market Intermediaries Regulation and Supervision Depatment, Securities and Exchange Boardof India, SEBI Bhavan II, Plot no. C-7, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai -400 051” and also to e-mail id:[email protected] in the format as given in table below:

139. The above directions shall come into force with immediate effect.

140. This Order shall be served on the Noticee, Recognized Stock Exchanges, Depositories and Registrar and Share Transfer Agents and Banks to ensure necessary compliance.

[1] E. Banks, The Palgrave Macmillan Dictionary of Finance, Investment and Banking (London, Palgrave Macmillan, 2010) pg. 59. 

[2] S. Sundararajan, Book of Financial Terms (New Delhi, Tata McGraw- Hill Publishing Company Limited, 2004) pg. 16. 

[3] Ed. B. Garner (9th ed., Black’s Law Dictionary, 2009) at pg. 1402. 

[4] (2011) 8 SCC 497. 

[5] (2017) 15 SCC 1.