Sebi bans CFAS, its partners from securities markets for 3 years for unauthorised advisory services

New Delhi, Dec 26 (PTI) Sebi on Monday barred Capproin Financial Advisory Services (CFAS) and its partners from the securities markets for three years for providing investment advisory services without the market regulator’s authorisation.

Capproin Financial Advisory Services is a partnership firm and its partners — Sourabh Rai and Jasmeet Kaur Bagga.

The order came after Sebi received complaints through the market watchdog’s SCORES (SEBI Complaints Redress System portal) platform against CFAS and its partners.

Thereafter, the matter was examined by the regulator to ascertain whether there had been any violation of the provisions of IA (Investment Advisers) norms.

Further, a show cause notice was issued to CFAS and its partners in March 2020.

In its order, the regulator found that CFAS and Rai were never registered with Sebi in any capacity as an intermediary. However, Bagga was registered with the regulator in her capacity as proprietor of Research Infotech.

According to Sebi, CFAS, Rai and Bagga were engaged in investment advisory services without obtaining the certificate of registration from the Securities and Exchange Board of India (Sebi) as an ‘investment adviser’, thereby flouting IA rules.

CFAS, Rai and Bagga are collectively referred to as noticees.

The noticees had received a total amount of Rs 75.19 lakh from January 2014 to September 2015, as per the order.

Sebi has directed the noticees to refund, within three months, the money received from investors in respect of investment advisory activities.

Also, the regulator has prohibited the noticees from accessing as well as dealing in the securities markets for a period of three years from the date of completion of refunds to investors along with depositing of balance amounts, whichever is later.

In addition, they shall not undertake investment advisory services or any activity in the securities markets without obtaining a certificate of registration from Sebi, either directly or indirectly, during or after the debarment period, the order said.

In a separate order, Sebi has passed an interim order barring 11 entities from the securities markets till further orders in a case of front-running activity by dealer Ashish S Parekh and its connected entities.

Also, the regulator has directed the entities to open an escrow account and deposit the impounded gains of Rs 1.25 crore within 15 days of this order.

In addition, the regulator has directed the entities not to dispose of any assets, whether movable or immovable except with the prior permission of Sebi until the impounded amount is deposited in the escrow account.

The regulator received a preliminary examination report from National Stock Exchange (NSE) with respect to suspected front running by Parekh and its ten connected entities during April-December 2021.

Thereafter, Sebi conducted a preliminary examination in the matter to look into possible violations of provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules by certain entities.