The Securities and Exchange Board of India (SEBI) has taken stringent actions against nine entities for violating investment advisory rules. Here’s a detailed overview of the situation and the actions taken by SEBI:
- Entities Involved and the Violations: The nine entities barred from the securities market for two years are 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. These firms, along with three individuals (Yogesh Kukadia, Rajesh Kallidumbil, and Nithin Raj), were found to be involved in providing unregistered investment advisory services. The probe, which covered the period from April 2018 to September 2019, revealed that they collected fees from 4,536 clients, amounting to Rs 810.24 lakh, through six partnership firms that were not registered with SEBI.
- Penalties and Directives: SEBI imposed a penalty of Rs 18 lakh on these entities, requiring payment within 45 days. Additionally, they were directed to refund the Rs 8 crore earned from investors through these unregistered services within three months. The three individuals mentioned above were also restrained from associating as directors or key managerial personnel with any listed public company for two years.
- Further Details from a Related Case: In a related case, SEBI refused to lift the securities market ban on nine entities involved in manipulating the share prices of Sharpline Broadcast Ltd. This was achieved through uploading misleading videos on YouTube channels. The interim order, dated March 2, 2023, found these entities to have engaged in a fraudulent and manipulative scheme, thereby contravening the Prohibition of Fraudulent and Unfair Trading Practices (PFUTP) Regulations. This case involved entities like Jatin Manubhai Shah, Angad M Rathod, and others, who orchestrated a “pump-and-dump” scheme of Sharpline Broadcast by spreading misleading YouTube videos to induce small investors to buy the stock at inflated prices.