MUMBAI (India CSR): SEBI - The Securities and Exchange Board of India has passed an interim order against Secure Investor Investment Advisory and its proprietor, Manish Lalwani, for engaging in unregistered investment advisory activities and defrauding investors.
According to the order dated May 16, 2023, SEBI received several complaints from investors alleging that Secure Investor Investment Advisory had offered them various schemes with guaranteed returns ranging from 10% to 20% per month. The firm also claimed to have tie-ups with reputed brokers and banks, and to provide online access to the investors' accounts.
However, SEBI found that the firm and its proprietor had violated various provisions of the SEBI Act, 1992, and the SEBI (Investment Advisers) Regulations, 2013. The firm had not obtained any registration from SEBI to act as an investment adviser or a portfolio manager. The firm had also made false and misleading statements to the investors and had misappropriated their funds for personal gains.
SEBI observed that the firm and its proprietor had prima facie committed fraud on the investors, and had eroded their confidence in the securities market.
Therefore, SEBI issued the following directions:
The firm and its proprietor shall within a period of three months from the date of this order, refund the money received from any complainants /investors /clients, as fees /consideration or in any other form, in respect of its unregistered investment advisory activities.
The firm shall cause to effect a public notice in all editions of two National Dailies (one English and one Hindi) and in one local daily with wide circulation, inviting claims from complainants /investors /clients within a period of fifteen days from the date of this order. The public notice shall detail the modalities for refund, including the contact details of the firm.
The repayments to the complainants /investors /clients shall be effected only through bank transactions, which ensures audit trails to identify the beneficiaries of repayments.
After completing the refund as directed above, the firm shall file a report to SEBI detailing the amount refunded to investors/clients, which should be certified by an independent Chartered Accountant. The report shall also include the proof of payment to one of the complainants for an amount of Rs. 10,00,000/-.
The remaining balance amount shall be deposited with SEBI, which shall be kept in an escrow account for a period of one year for distribution to clients/investors who were availing the investment advisory services from the firm. Thereafter, the remaining amount, if any, shall be deposited in the Investor Protection and Education Fund, maintained by SEBI.
The firm and its proprietor are restrained from selling their assets, properties and holding of mutual funds /shares /securities held by them in demat and physical form except for the sole purpose of making the refunds /depositing balance amount with SEBI, as directed above. Further, the banks are directed to allow debit only for the purpose of making refunds to the complainants /investors /clients who were availing the unregistered investment advisory services from the firm, as directed in this order.
Upon submission of reports on completion of refunds to complainants /investors /clients to SEBI and deposit of the balance amount if any, with SEBI, the direction above shall cease to operate within fifteen days thereafter.
SEBI also cautioned the investors to deal with only registered intermediaries in the securities market, and to verify their credentials before investing. SEBI further advised the investors to be wary of schemes offering unrealistic returns or guarantees.
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