sebi:QJA/SP/WRO/WRO/25017/2022-23
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Order passed against the Noticee finding violations of IA Regulations, 2013, PFUTP Regulations, 2003, SEBI Act, 1992 and SEBI circulars; specific penalties not stated in the excerpt provided
Provisions invoked
- s. 19
- s. 12A
- s. 12(3)
Regulations
- Reg. 3
- Reg. 13
- Reg. 16
- Reg. 17
- Reg. 22
- Reg. 21
- Reg. 3(a)
- Reg. 15(1)
- Reg. 21(1)
- Reg. 15(3)
- Reg. 28
- Reg. 24
- Reg. 25
- Reg. 27
- Reg. 27(5)
- Reg. 15(9)
- Reg. 13(b)
- Reg. 16(b)
- Reg. 27(1)
- Reg. 16(a)
Parties
- Money Secure Investor
Holding
The Noticee (Money Secure Investor) was found in violation of the IA Regulations, 2013, PFUTP Regulations, 2003, SEBI Act, 1992 and relevant SEBI circulars on multiple counts including failure to inform SEBI of material changes, promising assured profits, executing trades on behalf of clients, improper risk profiling, charging unreasonable fees, non-submission of ATR, non-redressal of SCORES complaints, and receipt of cash deposits.
Full text
Order in the matter of enquiry proceedings against Money Secure Investor Page 2 of 40 referred to as ‘PFUTP Regulations, 2003’), SEBI circular No. CIR/OIAE/2014 dated December 18, 2014 and SEBI/HO/IMD/DF1/CIR/P/2019/169 dated December 27, 2019 (hereinafter referred to as ‘SEBI circulars’) and SEBI Act, 1992 (hereinafter referred to as ‘SEBI Act, 1992’). Accordingly, Enquiry proceedings under the provisions of Intermediaries Regulations, 2008 was initiated against the Noticee. The DA appointed under Regulation 24 of the Intermediaries Regulations, 2008 issued a show cause notice dated August 25, 2021 under Regulation 25 of the Intermediaries Regulations, 2008, calling upon the Noticee to show cause as to why appropriate recommendation should not be made against it under Regulation 27 of the Intermediaries Regulations, 2008 for the alleged violations of the provisions of SEBI Act, 1992, IA Regulations, 2013 and PFUTP Regulations, 2003.
Order in the matter of enquiry proceedings against Money Secure Investor Page 3 of 40 change in the already submitted information. Sealing of its premises/equipment affected the working of the Noticee and Regulation 13(b) of IA Regulations requires that an IA shall inform SEBI about material change in the information which has already been submitted. The DA noted that, it is only when SEBI sought certain documents from the Noticee, that the Noticee informed vide email dated August 10, 2020 about filing of FIR against it and that its office was seized by Crime Branch. The Noticee failed to inform SEBI about this change in material information (filing of FIR against it and subsequent sealing of its premises/equipment) thus violation of Regulation 13(b) of IA Regulations.
Order in the matter of enquiry proceedings against Money Secure Investor Page 4 of 40 iii. Allegation 4: Execution of trades on behalf of its clients – Violation of Regulations 15(3), 22 of IA Regulations and Clause I of Code of Conduct as mentioned in Schedule III read with Regulation 15(9) of IA Regulations The ER stated the allegation, that the Noticee had indulged in trade execution services to its clients. The Noticee’s employees obtained user ID and password from clients and executed the trades on behalf of clients assuring some profit. The information received from the Noticee’s clients included conversations and call recordings from which it was observed that the employees of the Noticee obtained login details of trading account of investor for trading. One of the investors submitted a copy of the Whatsapp conversation where the executive of the Noticee obtained login details of trading account of investor for trading. Further, upon incurring of losses due to such trades, Noticee promised them to trade in the stock market to recover such losses. DA noted that the Noticee indulged in the service of execution of trades for its clients which is different from the activity of an investment adviser. The Noticee is required to act in fiduciary capacity and maintain arm- length relationship between its activities as an IA and other activities.
You have read the preview. Create a free account to read the full order, track this party, and analyse it in Ontology.
Free accounts include 10 searches/day with full order access.
Source: SecMarx — sebi:QJA/SP/WRO/WRO/25017/2022-23. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.