Market regulator Securities and Exchange Board of India (SEBI), in its ongoing pursuit against illegal market advisory, has banned Apex Financial Services and its proprietor, Jyoti Kalra from the security market for the tenure of six months. In the order issued by Ananta Barua, a whole-time member (WTM) of SEBI, Apex should refund the amount collected as fees for advisory services to the concerned individuals.
Ananta Barua said in the order, “The activities engaged in by Apex Financial Services, as brought out from the various materials, show that the company was acting as an investment adviser, although they were not registered with SEBI in the capacity of Investment Adviser. Hence, I find that these activities as were being made by the company without holding the mandatory certificate of registration as an investment adviser, are in violation of Section 12(1) of SEBI Act, 1992 read with regulation 3(1) of the IA Regulations, 2013. Rs.1,11,49,273 were received by Apex through the Bank of India account during the period 24 June 2014 to 22 February 2018, in lieu of the unregistered investment advisory activities.”
The case is related to a complaint SEBI received on 24 February 2017, which alleged that Apex Financial Services failed to provide proper service and the complainant suffered a loss of Rs16,000. The complaint also stated that the company incurred Rs9,000 as the fee for advisory.
The bank statements showed that Rs1,11,49,273 was received by the firm for investment advisory services. In the context of ample evidence, which proved that the company performed illegal advisory, SEBI issued a show-cause notice to Ms Kalra.
In the reply to the show-cause notice, the authorised representative of Ms Kalra contended that she was not aware that she required SEBI registration for running such a business and that none of the clients were forced in any manner nor were under undue influence, and nor was any coercion made for taking the advisory services. The company did not promise assured returns or handled clients’ demat accounts or claimed to be registered with SEBI. The authorised representative also denied the complaint.
However, Mr Barua stated that ignorance of the law cannot serve as an excuse for its violation and ordered Apex Financial Services to refund the money collected as fees for advisory services. Ms Kalra was also banned by SEBI from engaging in the market for the tenure of six months. The remaining amount in the account of the firm will be transferred to the investor protection and education fund maintained by SEBI.
(Order no: WTM/AB/WRO/WRO/22736/2022-23)