In a significant move, the Securities and Exchange Board of India (Sebi) has taken action against nine entities for violating investment advisory rules. The regulatory body has barred these entities from the securities market for a minimum of two years, with a directive to refund Rs 8 crore collected from investors through unregistered investment advisory services within the next three months. Sebi has also imposed a penalty of Rs 18 lakh collectively on the entities, with a stipulation to settle the amount within 45 days.
The entities facing the ban include Yogesh Kukadia, Rajesh R Kallidumbil, Nithin Raj, Signal2Noise Capital Partners, Investo Investment Advisers, SS Info Sales, SI Digi Sales, CT Web Sales, and ML Tele Sales. Additionally, three individuals, Yogesh Kukadia, Rajesh Kallidumbil, and Nithin Raj, have been restrained from associating as directors or key managerial personnel with any listed public company for a duration of two years.
Sebi’s investigation revealed that Yogesh and Rajesh, registered as investment advisers, had conducted investment advisory activities through six partnership firms not registered with Sebi. The regulator conducted a thorough inspection covering the period from April 2018 to September 2019, prompted by certain complaints. During this period, the entities collected Rs 810.24 lakh in fees from 4,536 clients for their unregistered investment advisory services.
The order issued by Sebi stated, “These activities were being carried out by the notices 1 to 9 without obtaining the necessary certificate of registration as investment advisers and therefore, the notices have violated … SEBI Act along with… IA Regulations.”
Consequently, Sebi has directed the nine entities to jointly and severally refund the collected amount to investors within three months. Furthermore, these entities are barred from accessing the securities market, directly or indirectly, for a period of two years or until the completion of refunds to complainants/investors, whichever is later.
By PTI
