TaxTMI 
TaxTMI 
2023 (10) TMI 1558
X X X X Extracts X X X X
X X X X Extracts X X X X
....e complainant has also provided the bank account details of Noticee 1, serviced by Axis bank wherein the aforementioned amount was paid by the complainant. 3. Pursuant to the receipt of the said complaint, SEBI conducted examination into the activities of Noticee 1 to ascertain whether there has been any violation of provisions of Securities and Exchange Board of India,1992 ("SEBI Act") and Regulations made thereunder. 4. During the course of the examination, SEBI found that following individuals are the owners/ co-owners of Shivaay Investment: - S. No. Name of Owner/ Co-owner Ownership Type 1 Rupaben K Bhatt Owner 2 Kevinbhai P Bhatt Co-owner 3 Jayarajbhai H Vala Co-owner TRANSFER OF CASE FROM PREVIOUS AUTHORITY 5. Pursuant to an internal re allocation of cases, the present matter was assigned to me on June 22, 2023. SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING: 6. On the basis of findings of the examination, SEBI issued a Show Cause Notice dated June 30, 2022 ("SCN") to the Noticees which, inter-alia, stated as follows: 6.1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had received a com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....following the line "Investor's satisfaction is our profit", which can motivate the firm that we are working so hard to achieve the Investor's satisfaction. Off market IPO We are offering deals in off market IPOs and current IPOs at attractive price with its confirmation Unlisted Shares We are providing unlisted shares deals, where investors can buy and sell unlisted shares under our experienced expert's guidance for maximizing their profit. Portfolio Management Under our experienced expert's guidance and supervision, we are helping investors to select the group of companies that can minimize the risk and maximize the profit on your valued investment for short term and long term. Investment advisory We are providing advisory services for equity, commodity, etc. segments which includes intraday, weekly and monthly expiry, future and options (F&O), short and long term investment ideas by our experts Market Research & Analysis Our expert team is evaluating the past and present performance of the shares and analyses the collective data to generate new investment strategies and ideas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Noticee no. 1 from various clients and the same is mentioned in table below: Mode No of transactions Amount (INR.) UPI 91 18,72,269/- IMPS 63 33,17,248/- NEFT 48 67,37,089/- RTGS 11 39,76,580/- Cash deposit 21 29,53,768/- Total 234 1,88,56,954 6.10. From the details mentioned on the website, information provided by Mr. Jaydeepgiri Goswami, bank account statements etc., it is prima facie observed that the Noticee no. 1 through Mr. Jaydeepgiri Goswami has held out itself as an investment adviser and Noticee no. 2, Noticee no. 3 and Noticee no. 4 have engaged in the activities of 'investment adviser' through Noticee no. 1 and have charged fee for such services." 7. Based on the facts stated in the said SCN, it was alleged that the Noticees were engaged in the activities of providing investment advisory services without obtaining the requisite registration from SEBI, as required in terms of Section 12(1) of the SEBI Act, read with Regulation 3(1) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 ("IA Regulations") and that the amounts credited in the bank account of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e same returned undelivered back to SEBI. Accordingly, the PAN of the said Noticees were blocked and DMAT accounts were frozen by the concerned Market Intermediary, pursuant to which the Noticees 2 and 3, through a common email dated May 06, 2023 sent from the email ID [email protected], replied to SEBI and promised full cooperation in the captioned matter. Through a subsequent email dated May 11, 2023, the Noticees 2 and 3 expressed their intension to refund monies to all the investors and requested SEBI to reactivate their PAN and unfreeze their DMAT accounts so that they could make bank transactions. The needful was done by the concerned market intermediary and Noticee 2 and 3, vide an email dated May 24, 2023, acknowledged receipt of HN2 and provided their updated contact details and sought 8 weeks' time to refund monies back to the investors. 12. Pursuant to re-allocation of the matter to me, opportunity for personal hearing was granted to all the Noticees on July 14, 2023. From the available records I note that a common Hearing Notice dated July 05, 2023 (HN3), issued in this regard, was delivered to Noticee 1, 2 and 3 through emails and to Noticee 4 through registere....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... December 08, 2006) inter alia held that - "...the appellants did not file any reply to the second show-cause notice. This being so, it has to be presumed that the charges alleged against them in the show-cause notice were admitted by them". 18. The Hon'ble SAT also made such proposition in case of Sanjay Kumar Tayal & Ors. Vs. SEBI (in appeal No. 68/2013) decided on February 11, 2014 viz. ".....appellants have neither filed reply to show cause notices issued to them nor availed opportunity of personal hearing offered to them in the adjudication proceedings and, therefore, appellants are presumed to have admitted charges levelled against them in the show cause notices". 19. Accordingly, the matter is proceeded ex-parte with respect to Notice 2, 3 and 4 on the basis of the documents and information available on record. Further, the submissions made by Mr. Jaydeepgiri Goswami, proprietor of "Shivaay Investment" (Noticee 1) are also taken into consideration. 20. Mr. Jaydeepgiri Goswami (proprietor, Shivaay Investment), vide an email dated August 06, 2022 had submitted his reply to the SCN. The relevant extract of the said reply is as follows: - "......I need to c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....H. SHALIN SCHOOL, NARODA, AHMEDABAD - 382325 (2) D/102 KESHAV GALAXY FALT, NEAR HARI DARSHAN CHOKDI, NAVA NARODA, AHMEDABAD CITY - 382330 (3) E/101, KAILASH ROYAL, NEAR DE-VARSHI SHINE, MUTHIYA VILLAGE, AHMEDABAD 382330 (LAST LIVING ADDRESS) Mr. Kevin Bhatt's Mobile No (1)0586500538 (2)9098074233 (3)7383660530 (4) 7203943150 (5) 9499528802. (LAST ACTIVE) Mrs. Rupa Bhatt's Mobile No (1)9586297700 (2)9510943849 Mr. Jayraj Vala's Mobile No) (1)9426130047 Email id: [email protected] [email protected] [email protected] Bank Details: NAME: RUPA BHATT A/C NO: 50100317518106 IFSC: HDFC0009112 BRANCH: SINDHUBHAVAN AHMEDABAD NAME: KEVIN PRAVINBHAI BHATT A/C NO: 8812175596 IFSC: KKBK0002564 BRANCH PALDT, AHMEDABAD NAME: JAYRAJBHAI VALA A/C NO: 66019043284 IFSC: SBIN0060037 BRANCH: CHALALA Also they are having bank accounts in ICICI Bank and IDFC FIRST Bank. Lastly, I would like to inform you....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., and Mrs. Bhatt's residence at Ahmedabad the door was locked and they were escaped. So I registered a police complaint to Una Police Station along with all their company's investors. As a result, Mr. Kevin Bhatt was caught by the Police on the 3rd of May 2023 and he promised the Police that he will pay the money to all his investors. He paid Rs. 77,000 to one of his investors Mr. Chirag Sadhu who is the main complainant in this matter on the date of 9th May 2023. Mr. Kevin Bhatt told that he has funds in some overseas account but he is unable to transect because of some SEBI notice compliances, so, I have supported him in updating his KYC to all the brokers and also time by time he presented himself whenever the police called him. On the date of 29th May 2023 he called me to his current resident village Savarkundla and made a notarized Consent Agreement with me. In that agreement they promised that they both will pay the money by two months. Until that time, they both requested that don't take any legal action because there are many of his investors belonging to a lower and lower middle-income group. So we all and the police gave him the time of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he PFUTP Regulations which are reproduced hereunder: - SEBI Act Registration of stock brokers, sub-brokers, share transfer agents, etc. Section 12 (1): "No stock broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act:" Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control. Section 12A: "No person shall directly or indirectly- (a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognised stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder; (b) employ any device, scheme or artifice....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g misrepresentation of the truth or concealment of material fact in order that another person may act to his detriment; (2) a suggestion as to a fact which is not true by one who does not believe it to be true; (3) an active concealment of a fact by a person having knowledge or belief of the fact (4) a promise made without any intention of performing it (5) a representation made in a reckless and careless manner whether it be true or false; (6) any such act or omission as any other law specifically declares to be fraudulent (7) deceptive behaviour by a person depriving another of informed consent or full participation, (8) a false statement made without reasonable ground for believing it to be true. (9) the act of an issuer of securities giving out misinformation that affects the market price of the security, resulting in investors being effectively misled even though they did not rely on the statement itself or any thing derived from it other than the market price. And "fraudulent" shall be construed accordingly; Regulation 4(1) Without prejudice to the provisions of regulation 3, no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ven through newspaper, magazines, any electronic or broadcasting or telecommunications medium, which is widely available to the public, shall not be an investment advice within the meaning of Regulation 2(1)(l) of the IA Regulations. 25. I note from the observations of SEBI that the website www.shivaayinvestment.com belongs to Noticee 1. I also note from records that the said website has been inactive. From the archived pages of the said website, downloaded from web.archive.org, it was observed that: - 25.1. The Noticee 1 claims to have been offering deals in the off market IPOs and current IPOs at attractive price with its confirmation. 25.2. The Noticee 1 claims to have been providing advisory services for equity and commodity segments which includes intraday, weekly and monthly expiry, future and options (F&O). It is specifically mentioned in the website that it is known for its unique portfolio management services and low risk investment advisory services which can maximize the profit of its investors with the minimum risk profile and its unique ideas and trading strategies helps its investors to earn higher profit. 25.3. The Noticee 1 claims to be having an expert ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....PS/P2A/035211306998/CHIRAGRA/ICICIBAN/Bectorsi 0 46,200 11/01/2021 NEFT/MB/AXMB210116065739/SADHU CHIRAGBURGERKING R 75,737 0 Total 1,46,982 1,39,330 28. On perusal of the statements of the bank account (in the name of "Shivaay Investment"), I note that there were many credit entries received from various individuals. From the narrations of few of these transactions, like "Chemcon", "Mazagon", "Burger King", "Mrs Bector" etc., I note that these were some of the IPOs that had hit market in the past. In this regard, from available records, I note the following transactions: - 28.1. Amounts received for IPO of Chemcon Speciality Chemicals Ltd.: TRANSACTION DATE PARTICULARS Credit (INR) 22/09/2020 IMPS/P2A/026615827276/CHETANHA/ICICIBAN/Chemconi 1,04,720 22/09/2020 UPI/P2A/026615039382/GAURAV R/Kotak Mah/CHEMCON 14,960 23/09/2020 UPI/P2A/026710902249/JAYPRAKAS/Bank of I/Chemcom 30,260 23/09/2020 IMPS/P2A/026710938791/CHETANHA/ICICIBAN/Chemconi 74,800 23/09/2020 UPI/P2A/026711242104/MEET P GO/HDFC BANK/Chemcon 138 15/10/2020 NEFT/N289201276668184/RUPABEN BHATT/Chemcorn 9,67,00....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Credit (INR) 03/12/2020 IMPS/P2A/033812357943/ODIYA/HDFCBANK/Ipo 25,000 04/12/2020 IMPS/P2A/033911874238/CHIRAGRA/ICICIBAN/IpoBkshi 62,350 16/12/2020 IMPS/P2A/035115283500/CHETANHA/ICICIBAN/BKiporet 45,000 16/12/2020 IMPS/P2A/035118361735/ODIYA/HDFCBANK/Ipo 20,020 16/12/2020 UPI/P2A/035121470249/MITESH VA/State Ban/IPO 15,400 17/12/2020 RTGS/HDFCR52020121763663387/KALPESH SOLANKI///Ipo 3,74,836 17/12/2020 IMPS/P2A/035214107271/KALPESHS/HDFCBANK/Ipo 59,444 17/12/2020 IMPS/P2A/035215107955/KALPESHS/HDFCBANK/Ipo 30,800 28.6. In addition to above, there were few transactions with remarks such as "Invest", "Stock" and "Stocks". Few examples are given below: - TRANSACTION DATE PARTICULARS Credit (INR) 22/09/2020 UPI/P2A/026616748386/BRIJESH R/State Ban/Invest 20,060 26/10/2020 IMPS/P2A/030012085108/CHIRAGRA/ICICIBAN/TCSstock 30,780 03/12/2020 UPI/P2A/033816344262/ASMITABEN/Union Ban/Stocks 49,880 29. The above said transactions carrying narrations as stated above further stand to buttress the allegation that the nature of services rendered by the Noticee No.1 is nothing but....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the Noticee 2 and 3 had consented to return an amount of INR 2,92,67,397.71 to all the investors within two months and in case they fail to do so, Mr. Goswami, the consent taker may initiate appropriate legal action against them. However, from the reply of Mr Goswami, I note that the consentors could not be contacted. From available records, I note that the Noticees have not demonstrated repayment of monies to investors with any proof and / or certificate / audit report of a Chartered Accountant establishing return of monies. Thus, the replies are not acceptable. 33. Mr. Goswami has further submitted that he didn't know the developer of the website but admitted transferring some amounts to him on instructions of Noticee 3. He further contended that he had no idea about Share Markets or the nature of work of the company "Shivaay Investment". He joined the company as he didn't have any job and that he had cooperated with the SEBI and police authorities. 34. I note that in the instant matter, several innocent investors had transferred funds in the bank account number 920020042899667 which was opened in the name of company "Shivaay Investment" with Mr. Jaydeepgiri Goswami as th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, of SEBI, as the case may be, in Form A as specified in the First Schedule to IA Regulations, 2013 along with requisite non-refundable application fee; 35.2. The applicant, in case of an individual investment adviser or its principal officer in case of a non-individual investment adviser shall be appropriately qualified and certified as under: a. A professional qualification or post-graduate degree or post graduate diploma (minimum two years in duration) in finance, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science from a university or an institution recognized by the Central Government or any State Government or a recognized foreign university or institution or association or a professional qualification by completing a Post Graduate Program in the Securities Market (Investment Advisory) from NISM of a duration not less than one year or a professional qualification by obtaining a CFA Charter from the CFA Institute; b. An experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management; c. Applicant in case of in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, 2003 and have violated Section 12A (a), (b) and (c) of SEBI Act, 1992 read with Regulation 4(1) and 4(2)(k) of the PFUTP Regulations, 2003. 40. From the contents of the webpages of the website, www.shivaayinvestment.com, downloaded from web.archive.org, I note that "Shivaay Investment" was into providing investment advisory services for equity and commodity segments which includes futures and options (F&O). I however note that "Shivaay Investment" is not registered with SEBI in any capacity and this fact has not been mentioned in the said website. It appears that the unregistered status of "Shivaay Investment" with SEBI has been intentionally concealed from general investors as many of them may presume it to be registered with SEBI. 41. It is further claimed on the website that the entity was offering deals in off market IPOs and current IPOs at attractive price with its confirmation. For a general investor the said statement is in the nature of an assurance for allotment of shares, if services are availed of through "Shivaay Investment". The website further mentions that the services provided by "Shivaay Investment" which include low risk investment advisory services, uni....
X X X X Extracts X X X X
X X X X Extracts X X X X
....investment. In subsequent reply dated July 15, 2023, Mr. Goswami had submitted that he didn't know the developer of the said website, but he had transferred some amounts to him on the instructions received from Noticee 3. Both the statements made by Mr. Goswami are self-contradictory to each other as the former gives an impression that Mr. Jaydeepgiri Goswami was not aware of the website while the latter gives an impression that he was aware of the website. 45. It is pertinent to refer to the observations of the Hon'ble Supreme Court in the case of SEBI Vs. Kanaiyalal Baldevbhai Patel (2017) 15 SCC 1, which are as under: - "The definition of 'fraud', which is an inclusive definition and, therefore, has to be understood to be broad and expansive, contemplates even an action or omission, as may be committed, even without any deceit if such act or omission has the effect of inducing another person to deal in securities. Certainly, the definition expands beyond what can be normally understood to be a 'fraudulent act' or a conduct amounting to 'fraud'. The emphasis is on the act of inducement and the scrutiny must, therefore, be on the meaning that mu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e investors to deal in securities and by such acts and omissions, the Noticees 1, 2, 3 and 4 have violated Section 12A (a), (b) & (c) of SEBI Act, 1992 read with Regulation 4(1) and 4(2)(k) of the PFUTP Regulations, 2003. 49. I note that the SCN, inter alia, calls upon the Noticees to show cause as to why penalty be not imposed upon them under Section 15HA and 15EB of the SEBI Act, 1992. Section 15 EB and 15HA of the SEBI Act are extracted hereunder: - "Penalty for default in case of investment adviser and research analyst. 15EB. Where an investment adviser or a research analyst fails to comply with the regulations made by the Board or directions issued by the Board, such investment adviser or research analyst shall be liable to penalty which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees." Penalty for fraudulent and unfair trade practices. 15HA. If any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a penalty which shall not be less than five lakh rupees but which may ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cal daily with wide circulation, about this Order and shall give details of modalities for refund, including the details of contact person such as name(s), address(es) and contact detail(s) of person(s) to be approached for refund, within 15 days from the date of receipt of this order; 52.3. The Noticees 1 to 4 shall accept refund claims/ requests for a period of 3 months from the date of public notice, as directed under para 52.2 above; 52.4. The Noticees 1 to 4 shall within a period of four months from the date of public notice, as directed under para 52.2 above, carry out and complete the refund exercise; 52.5. Upon expiry of four months from the date of public notice, any balance of such advisory fee that remains with the Noticees 1 to 4, due to their inability to contact the client or otherwise, as directed in para 52.2 above, shall be deposited in a dedicated escrow account, to be opened and maintained by the Noticees 1 to 4 for a period of one year and utilized only for the purpose of refund to the clients. Thereafter, the amount lying in the said escrow account shall be transferred to the Investors Protection and Education Fund maintained by SEBI; 52.6. The repa....