SEBI | Assuring profits in a market already subjected to risk- Debarred from the market for subjecting others to risk

Securities and Exchange Board of India (SEBI): G. Mahalingam, Whole Time Member, while deciding an order was of the opinion that the Noticee, Samrat Trader and its proprietor Altamash Sheikh did not act honestly, fairly and in the best interests of its clients and in the interest of integrity of the market. The Noticee was actively involved in assuring benefits in investments, which is an area that is already subjected to market risks. Therefore, for making false statements, and thereby misleading SEBI, the Tribunal prohibited the Noticee from accessing the securities market for a period of four years.

In the instant matter, Noticee was a proprietor of Samrat Traders and a partner of Proficient Research, and was alleged to have obtained the registration certificate for carrying out investment advisory activities from SEBI, by giving false information, and thereby misleading SEBI. It was further alleged that Noticee guaranteed assured returns to his clients and offered various products/packages to prospective clients through misleading statements and false information.

Pursuant to the complaints received by SEBI and the available evidences (through emails and chats) an Interim order was passed against the Noticee for the alleged violations of the provisions of the SEBI Act, 1992 and Securities and Exchange Board of India (Prohibition of Fraudulent; Unfair Trade Practices relating to Securities Market) Regulations, 2003 and Securities and Exchange Board of India (Investment Advisers) Regulations, 2013, and was ordered to cease and desist from acting as an investment adviser, and solicit such advisory or any act that directly or indirectly pertained to the same. And not to divert any money made from those investors.

Notably, complaints were received on SEBI’s SCORES Portal against Samrat Trades during the period August 2018 to March 2019. Where one of the complainant paid Rs. 3,64,806 in 13 trenches between August 17, 2018 to October 29, 2018. The complainant received calls many subsequent calls from the same person of the Company, asking for money to be paid for different plans that she offered at every single call. And even assured profits, while the complainant only incurred losses.

The Tribunal after considering the relevant documents and statements made by the parties, observed that the Noticee,  (proprietor and partner) is one and the same person who not only assured unrealistic returns but also misled SEBI by giving false information, thereby has failed in terms of reputation and honesty and had violated the provisions of the SEBI Act, 1992 (“SEBI Act”) and Securities and Exchange Board of India (Prohibition of Fraudulent; Unfair Trade Practices relating to Securities Market) Regulations, 2003 (“PFUTP Regulations”) and Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 ( “IA Regulations”), section 12(1) of SEBI Act read with Regulations 3(1) of the IA Regulations, Clause 1 of Code of Conduct for Investment Adviser read with regulation 15(9) of IA Regulations.

It further noted that,

“Investments in securities markets are subject to risks and hence the returns are unpredictable. Therefore guarantee of assured profits by the Noticee in any manner through its plans/schemes is fraudulent and might have induced the investors to invest in such plans/schemes”.

Resultantly, the Noticee was prohibited from any selling or dealing of securities for not less than 4 years, and directed further to resolve all the complaints received from SEBI’S SCORES and shall be restrained from holding any position with any company or authority registered with SEBI.[Samrat Traders, In re, WTM/GM/WRO/WRO/14066/2021-22, decided on- 01-11-2021]

Agatha Shukla, Editorial Assistant has reported this brief.


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