Nine firms who were engaged in providing unregistered investment advising services have had strict action taken against them by the Securities and Exchange Board of India (SEBI). The regulatory body has ordered these companies to return Rs 8 crore to investors within the next three months and has excluded them from the securities market for no less than two years.
As part of this penalty, SEBI has imposed a total penalty of Rs 18 lakh on these companies and directed them to pay the money within 45 days. Yogesh Kukadia, Rajesh R Kallidumbil, Nithin Raj, Signal2Noise Capital Partners, Investo Investment Advisers, SS Info Sales, SI Digi Sales, CT Web1 Sales and ML Tele Sales are among the barred companies.
Three people, Yogesh Kukadia, Rajesh Kallidumbil, and Nithin Raj, have also been prohibited from holding director or senior management positions in any publicly traded firm for a period of two years in addition to the market ban.
Following an examination by SEBI, it was discovered that Yogesh and Rajesh, who were registered as investment advisors, were working with six unregistered partnership businesses to carry out investment advising services. Due to these concerns, SEBI, the regulatory body, opened an inspection into these firms, which didn’t have a registration with them.
The entities allegedly received fees from users for unlicensed investment advising services totaling Rs 810.24 lakh, as per SEBI’s findings. In violation of SEBI laws, the fees were collected from 4,536 clients via the six unregistered partnership entities.
According to the regulatory order, noticees 1 through 9 were engaged in these activities without acquiring the required certificate of registration as investment advisors. As a result, the noticees were in violation of both the IA Regulations and the SEBI Act.
Additionally, SEBI has also ordered the entities to return the money they were paid within three months. During this time, they are not allowed to participate directly or indirectly in any securities market operations.