SEBI bars Apex Financial Services from Market for Illegal Advisory

SEBI bars Apex Financial Services from Market for Illegal Advisory

The Securities Exchange Board of India (in short SEBI) debarred Apex Financial Services and its sole proprietor Ms. Jyoti Kalra (herein after referred to as 'noticees') from accessing the securities market, directly or indirectly and were prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly, for a period of six months from the date of the order or till the expiry of six months from the date of completion of refunds to complainants/ investors along with depositing of balance amounts, with SEBI.

In the order issued by Ananta Barua, a whole-time member of SEBI stated, "The activities engaged in by Apex Financial Services, as brought out from the various materials, show that the company was acting as an investment adviser, although they were not registered with SEBI in the capacity of Investment Adviser. Hence, I find that these activities as were being made by the company without holding the mandatory certificate of registration as an investment adviser, are in violation of Section 12(1) of Securities Exchange Board of India Act, 1992 (in short SEBI Act, 1992) read with regulation 3(1) of the SEBI (Investment Advisers) Regulations, 2013. Rs. 1,11,49,273 were received by Apex through the Bank of India account during the period 24 June 2014 to 22 February 2018, in lieu of the unregistered investment advisory activities."

The proceedings emanate from show cause notices dated 14 July, 2021 and 7 February, 2022 issued by SEBI against the notices wherein it was prima facie alleged that the Noticees were engaged in investment advisory services without obtaining a certificate of registration from SEBI in violation of the provisions of Section 12(1) of SEBI Act, 1992. On 24 February, 2017 SEBI had received a complaint against the notices where it was inter alia, alleged that the complainant had made a payment of Rs. 9,000 for the purpose of advisory services to the noticees but the noticees did not provide proper service and the complainant suffered a loss of Rs. 16,000.

According to the archived pages of the website www.apexresearch.co.in, SEBI found that the company acted as an investment advisory without prior registration. From the KYC documents received from Payumoney and Bank of India, it was observed that the Bank of India account linked to Payumoney was in the name of Apex Financial Services, proprietor Ms. Jyoti Kalra. Total credits in the bank account were Rs. 1,11,49,273 for the period 24 June, 2014 to 22 February, 2018. Rs. 81,10,827 were received through Payumoney account during the period 14 July, 2015 to 4 September, 2017. Sufficient evidences were found, which proved that the company performed illegal advisory, hence SEBI issued a show-cause notice to the notices.

SEBI noted that the website www.apexresearch.co.in claimed that Apex was a stock market advisory firm and offered tips in currency, agri-commodity, base metal, energy and MCX segments. Further the board noted that the noticees had admitted that Apex was a proprietorship concern of Ms Jyoti Kalra and that the noticees were in the business of providing tips in the share market to clients and charged fee from them as well. Therefore, the Board was of view that the noticees were providing investment advice, inter alia, through the website www.apexresearch.co.in.

SEBI stated, "the noticees have contended that they were not aware of the statutory provisions in this regard including the registration requirements and that if SEBI had informed them about it, they would have stopped operations. In this regard, I note that it is an accepted principle that ignorantia juris non-excusat. In view of the above, I find that the contention of the noticees in this regard is untenable."

SEBI observed that the activities engaged in by the noticees, seen in the backdrop of the aforesaid regulatory provisions showed that the noticees were acting as Investment Adviser, although they were not registered with SEBI in the capacity of Investment Adviser. Hence, these activities/ representations as were being made by the noticees without holding the mandatory certificate of registration as investment adviser, were in violation of Section 12(1) of SEBI Act, 1992 read with regulation 3(1) of the IA Regulations, 2013.