The Securities Appellate Tribunal (SAT) dismissed an appeal against the Order of the Securities and Exchange Board of India (SEBI) wherein the Appellant was directed to refund the collected amount, restrained from accessing the securities market, and a penalty of Rs. 6 lakhs was imposed on account of unauthorized investment advisory activities.
In the instant case, the appellant, while applying for registration as a Research Analyst with SEBI, was found to have been conducting investment advisory services without proper registration under the SEBI (Investment Advisors) Regulations, 2013. The Appellant had applied for registration on 26.08.2021 but had been operating since December 2020, collecting funds amounting to Rs. 10.72 lakhs from his clients without registration. Moreover, the appellant falsely represented itself as registered with SEBI on its website, misleading investors. SAT upheld SEBI's decision to impose penalties, citing violations of regulations 3 and 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
Regulation 3 of the SEBI (Investment Advisors) Regulations, 2013, mandates registration for investment advisors and Section 12(1) of the Securities and Exchange Board of India Act, 1992, prohibits unregistered investment advisory activities. The appellant's actions were deemed to be in violation of these provisions, as they operated without registration and misled investors about their status.
-Restock Research v. Securities and Exchange Board of India [2023] 157 taxmann.com 596
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