sebi:Order/AN/SM/2024-25/31315
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Facts / Headnote
Violations established; monetary penalty of Rs. 10,00,000 imposed under Section 15EB of the SEBI Act, 1992
Provisions invoked
- s. 15
- s. 19
- s. 11B
- s. 11
- s. 15I
- s. 15J
- s. 15F
- s. 28A
- s. 15E
Regulations
- Reg. 3
- Reg. 25
- Reg. 29(1)
- Reg. 27
- Reg. 24
- Reg. 201
- Reg. 15(9)
- Reg. 24(2)
Parties
- Nikhil Dayanand Baljekar
Holding
The Noticee was held to have violated Regulation 29(1) & (2) of RA Regulations 2014 and the Code of Conduct for failing to provide information sought during inspection, and Regulations 3(a-d), 4(1) and 4(2)(s) of PFUTP Regulations 2003 read with Sections 12A(a), (b) and (c) of the SEBI Act for mis-selling research services through third parties and outsourcing core activities. A monetary penalty of Rs. 10,00,000 was imposed under Section 15EB of the SEBI Act, 1992.
Full text
Adjudication Order in the matter of Nikhil Dayanand Baljekar- Research Analyst | Page 2 of 33 4.1. Regulation 29(1) & (2) of SEBI (Research Analyst) Regulations 2014 (hereinafter also referred to as ‘SEBI (RA) Regulations, 2014’ / ‘RA Regulations 2014’); 4.2. Clauses 1, 2 & 7 of the Code of Conduct as specified in the Third Schedule under Regulation 24(2) of the SEBI (Research Analyst) Regulations 2014; 4.3. Regulations 3 (a - d), 4 (1) and 4 (2) (s) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (‘SEBI (PFUTP) Regulations, 2003 / ‘PFUTP Regulations’) read with sections 12 A (a), (b) and (c) of SEBI Act, 1992; 4.4. Clauses 1 & 2 of the Code of Conduct as specified in the Third Schedule under Regulation 15(9) of Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (‘IA Regulations, 2013); 4.5. Clause 12.5 of VI-MISCELLANEOUS of SEBI Master Circular for Investment Advisers SEBI/HO/MIRSD-PoD-2/P/CIR/2023/89 dated June 15, 2023 and Clause 9.5 of IV-MISCELLANEOUS of SEBI Master Circular for Research Analysts SEBI/HO/MIRSD-PoD-2/P/CIR/2023/90 dated June 15, 2023 (‘Circular dated June 15, 2023’).
Adjudication Order in the matter of Nikhil Dayanand Baljekar- Research Analyst | Page 3 of 33 (‘Adjudication Rules’), the Competent Authority appointed the undersigned as Adjudicating Officer (AO) vide order dated May 06, 2024 to inquire into and adjudicate under Section 15EB of the SEBI Act, 1992 the alleged violations by the Noticee. The said proceeding of appointment was communicated to the undersigned vide Communique dated May 08, 2024.
Adjudication Order in the matter of Nikhil Dayanand Baljekar- Research Analyst | Page 4 of 33 RA-NDB vide letter of observation dated March 20, 2024. 6.1.5. However, RA-NDB has not responded to the letter of observation. Further, vide email dated March 26, 2024, RA-NDB has provided the copy of statement of bank account and stated that he is in process of gathering the client information and rest of information will be provided after being discussed with its consultant (Ms. Meghna). Further, it was stated that he will be able to do after April 07, 2024 and sought the additional time to submit the aforesaid information to inspection team. 6.1.6. In this regard, as on March 28, 2024, the aforesaid information was not submitted by RA-NDB despite after one month from the date of inspection, RA-NDB has failed to provide the complete information to SEBI. 6.1.7. Considering the non-submission of information/reply to letter of observation, it was presumed by SEBI that RA-NDB has no explanation to offer in this regard and thereby, hampered the inspection. Therefore, it is alleged that Noticee has violated the following: Regulation 29(1) & (2) of RA Regulations 2014. Clauses 1, 2 & 7 of the Code of Conduct as specified in the Third Schedule under Regulation 24(2) of the RA Regulations 2014. 6.2. RA-NDB has engaged in mis-selling of research services through third parties fraudulently by allowing usage of his license/SEBI registration (IA/RA), allowing the third parties to give recommend
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