The Securities and Exchange Board of India (SEBI) has fined MI Research Rs 35 lakh for violating regulatory norms. In a separate order, Sebi imposed a Rs 6 lakh fine on an entity for failing to comply with disclosure norms regarding Selene Estate Ltd.
MI Research, owned by Ashish Jain, is a Sebi-registered Investment Adviser. Sebi issued the order after conducting an examination of MI Research’s business in relation to its compliance with Investment Advisers (IA) regulations. The examination period spanned from November 2017 to August 2019. Sebi discovered in its Monday order that MI Research had amassed up to Rs 1.95 crore from 748 clients by charging them for investment advisory services, with the fee amount appearing unreasonably high.
MI Research failed to meet the basic requirements of IA rules. It also promised guaranteed returns and misrepresented its services to clients, thereby failing to act honestly and in good faith with due skill, care, and diligence. It did not adhere to high professional standards, appropriate conduct standards, or regulatory requirements. “Therefore, I find that MI Research acted with blatant disregard for its clients’ interests. It exposed its uninformed clients to financial risk while simultaneously charging them exorbitant fees. Given these serious violations, I believe that the fees collected by MI Research from its clients amounted to disproportionate gain or unfair advantage,” said Sebi’s Adjudicating Officer Soma Majumder in the order.
As a Sebi-registered investment adviser, MI Research was legally obligated to abide by IA norms and act honestly and fairly in its clients’ best interests. However, it deliberately failed to do so, according to the order. In three separate orders issued on Monday, the regulator imposed a Rs 5 lakh fine each on Vineeta Rani, Vipul Kothari, and Kanchan Agarwal for engaging in non-genuine trades in the illiquid stock options segment on the BSE. This order was issued after Sebi observed large-scale reversal trades in the illiquid stock options segment on the BSE, which led to artificial trading volumes on the exchange. The regulator further conducted an investigation into the trading activities of certain entities involved in this segment from April 2014 to September 2015. In another order, Sebi imposed a Rs 6 lakh fine on an entity for failing to comply with disclosure norms regarding Selene Estate Ltd.