Regulator Sebi has barred Profitsaim and its proprietor Syed Ayaz from the capital markets for providing unauthorised trading tips to investors.
Besides, they have been prohibited from carrying out investment advisory services till further orders.
The direction comes after the regulator received a complaint in May from Nitesh Jain, proprietor of ProfitAim Research, a Sebi-registered investment advisor, against Profitsaim alleging that it is an unregistered entity which is defrauding people and misusing the name of his firm.
Pursuant to this, Sebi conducted a preliminary examination and found that Profitsaim was soliciting and inducing investors to deal in securities market on the basis of investment advice, stock tips, among others, prima facie, without having the requisite registration as mandated under the IA norms.
Prima facie, Profitsaim had collected Rs 33.74 lakh from investors through such services.
By indulging in such activities, they violated the provisions of investment advisers (IA) Regulations, the Securities and Exchange Board of India (Sebi) said in an interim order last week.
Accordingly, Sebi directed Profitsaim and its sole proprietor Ayaz to "cease and desist from acting as an investment advisor" until further orders.
They have been asked to immediately withdraw and remove all advertisements in relation to their investment advisory activity until further orders.
Further, the regulator prohibited them from diverting any funds raised from investors and restrained them from disposing of any assets, whether movable or immovable, including money lying in bank accounts, except with the prior permission of Sebi.
Sebi asked them "not to access the securities market and buy, sell or otherwise deal in securities in any manner whatsoever, directly or indirectly, until further orders".
Profitsaim and Ayaz may file objections and/or request for personal hearing, if any, receivable by Sebi within 21 days from the date of the order and contest the findings, Sebi said in the interim order passed on November 12.
If the objections or request for personal hearing, if any, are not received by Sebi within the prescribed period, then it will be construed that Profitsaim and Ayaz have no objections and have admitted the finding or allegations that have been made against them, the regulator said.
In the event of the same, final directions will take effect against Profitsaim and Ayaz, it added.
The final directions include Profitsaim and Ayaz refunding the money received from clients in respect of the unregistered investment advisory activities and submitting a certificate from a chartered accountant, within a period of three months from the date of expiry of the prescribed period.
Further, they will be barred from the capital markets "till the expiry of 5 years from the date of refund of the money" under the final direction.
The interim directions would take effect immediately.
If objections or request for personal hearing are not filed and received by Sebi within the prescribed period, the interim directions would operate till the prescribed period and thereafter the final directions would take effect, Sebi said.
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today