sebi:SEBI/ERO/JJ/03/6725

SEBI · SEBI · 2003-11-27 · A.K. BATRA, Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Directed to cease and desist from acting as unregistered portfolio manager, accepting deposits, managing portfolios and publishing luring advertisements; restrained from buying, selling or dealing in securities market directly or indirectly with immediate effect until further orders, with post-decisional hearing on request.

Provisions invoked

• s. 11

Parties

• Delta Alliance Financial Services
• Shri Rajeev Kapoor

Holding

Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor were directed to cease and desist from acting as an unregistered portfolio manager, accepting deposits, managing investor portfolios and publishing soliciting advertisements, and were restrained from dealing in the securities market until further orders.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER SECTION 11, 11B AND 11D OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT AGAINST DELTA ALLIANCE FINANCIAL SERVICES AND ITS PROPRIETOR SHRI RAJEEV KAPOOR

and prospectus advising the investors to open an account with any NSE member as per NSE guidelines. From the prospectus it is noted that the investors have to first enter into an agreement with Delta enabling it to manage their portfolio. The said agreement stipulates, inter alia, as under: The client deposit certain amount of money as a margin deposit. Investors authorize Delta to execute transactions of buy and sell of securities on their behalf. They would also authorize Delta to operate their internet on- line trading accounts giving the Delta their password and ID both on equity and derivatives market. Penalties imposed by Exchange for failure to square off will be borne by Delta. 100% of loss will be borne by Delta. Investors have to pay 80% of profits as consultancy to Delta. Delta issues post dated cheques to investors to cover up any loss. Investors authorizes Delta to operate their beneficiary account and internet on-line trading account and to issue delivery slips on their behalf to POA Holder ie., Delta and POA is irrevocable for 12 months. • • • • • • • •

From the prospectus it is further observed that the Delta charges 25% to 80% of the profit earned by clients as their consultancy charges and the investors are required to deposit an amount ranging from Rs.1 lakh to Rs.15 lakhs as trading margin. Further it is noted that the Delta issued an advertisement in Economic Times on December 8, 2003 assuring returns ranging from 60% to 138% p.a. on the investment by the investors. Prima facie, this appears to be an exaggerated claim with intention to dupe the small investors. Therefore, SEBI vide letter No. SEBI/ERO/JJ/03/6725 dated 17.12.2003 had issued a notice to Delta requiring it to show cause as to why appropriate directions under Section 11, 11B and 11D of SEBI Act, 1992 should not be issued against it restraining it from acting as unregistered portfolio manager and requiring the entity to cease and desist from accepting deposits from and managing portfolio of the investors. In the said notice Delta was further advised that in the interest of the investors and to protect the integrity of the securities market, not to act as `Portfolio Manager’ without obtaining registration from SEBI and not to accept any deposit in any manner whatsoever till a

Source: SecMarx — sebi:SEBI/ERO/JJ/03/6725. 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.