TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 204
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....ct, 1992 (hereinafter referred to as "SEBI Act"), Securities and Exchange Board of India (Research Analysts) Regulations, 2014 (hereinafter referred to as "RA Regulations") and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations"). 3. The summary of contraventions alleged to have been committed by the Noticee and the corresponding provisions of the SEBI Act, Regulations and Circulars are given in the table below: Table 1 S. No. Alleged violations Regulatory provisions 1 Misrepresentation on the website Regulation 24(2) of RA Regulations read with Clause 1, 2 and 8 of the Code of Conduct specified in Schedule III of RA Regulations. 2 Failure to maintain records of duly signed and dated research reports. Regulation 25(1)(i) of RA Regulations. 3 The registered office of the Noticee was closed and no research analyst activities were being carried out from the said office Regulation 24(2) of RA Regulations read with clause 1, 2, 7 and 8 of the Code of Conduct specified in Schedule III of RA Regulations. 4 The Noticee was promising assured....
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....ted February 17, 2025, filed its written submissions in the matter. The submissions made by the Noticee are summarized as under: a. The averments regarding applicability of section 65B of the Indian Evidence Act, 1872 (hereinafter referred to as the "Evidence Act") are misplaced and contrary to the practice adopted by SEBI in various cases. Section 11(3) of the SEBI Act clearly states that the Board shall have the powers of a civil court and thus, the finding in the Enquiry Report that Evidence Act is not applicable upon SEBI as it is a quasi-judicial body is bad in law. Further, SEBI has itself held in cases that such recordings cannot be relied upon without verification and authentication in today's age of artificial intelligence and deep fake; b. The DA has relied upon assumptions and presumptions and not on cogent evidence, and relied upon her opinion '...any person before investing through any intermediary will read about the intermediary before making any investment decision...' to conclude that something written in the Frequently Asked Questions (FAQs) will have any bearing on any investor. The DA has failed to consider that if a person was to rely on such ....
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....ON AND FINDINGS: 10. I have perused the Enquiry Report issued to the Noticee along with the Post- Enquiry SCN, the SCN issued by the DA and other material available on record. In the instant proceedings, the DA has recommended that a regulatory censure be issued to the Noticee for the alleged violations. 11. Before dealing with matter on its merits, I deem it fit to address a preliminary submission made by the Noticee as regards applicability of section 65B of the Evidence Act. I note that the DA had relied upon certain call recordings as evidence, to deal with the charge mentioned at Sr. no. 4 of table-1, i.e., the Noticee was promising assured returns to its clients. In that context, the submission of the Noticee that the said call recordings are not admissible in evidence sans the certificate under section 65B, was rejected by the DA. However, the allegation of Noticee providing assured return to its clients was dropped on account of inadequacy of evidence. Since, the said allegation is not an issue, in the present proceedings before me, and the subject call recordings are not being analyzed or relied upon, the submission of the Noticee does not need further deliberation. ....
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....t with the findings of the DA. However, I deem it important to note that, as on date, the said text has been removed from the website of the Noticee. Failure to maintain records of duly signed and dated research reports 18. The DA SCN alleged that the Noticee did not maintain duly signed and dated research reports. The DA, in her report, has observed that the texts/ SMS (containing research recommendations) sent to the clients were research reports in terms of regulation 2(w) of the RA Regulations and in order to enable the investors to make an informed decision, the Noticee ought to have also sent the rationale for providing such research recommendations. 19. The Noticee, in this regard, has argued that the DA has erred in observing that the Noticee was required to send the research reports to its clients, along with the research recommendations and failure to do the same was in violation of regulation 25 of the RA Regulations. Regulation 25 mandates the research analysts to keep records of certain documents and as per the Noticee, it had maintained all the requisite records. 20. I have perused the allegation in the DA SCN, submissions of the Noticee made before the DA....
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.... on account the place being a co-working space, the Noticee has not provided any explanation as to why the address of the Noticee, i.e., Unit No. 611, was found to be closed at the time of onsite inspection. Additionally, while details of other entities were displayed in the premises, details of the Noticee were not there, at all. Further, during the said inspection, on contacting Mr. Mahesh Yadav (director of the Noticee), it was informed that the staff is working from home and majority of the work is done from Indore branch. The above facts indicate that the Noticee was not functioning from its principal place of business, and instead, was carrying out its operations from the Indore office. 25. I further note that at the time of seeking registration, the Noticee was required to submit the address of the registered office, address for correspondence and principal place of business, and any change in such material information was to be brought to the notice of the regulator forthwith in terms of regulation 13 of the RA Regulations. Clearly, in the present case, no such intimation was sent by the Noticee to SEBI. 26. It is alleged in the Post Enquiry SCN that the Noticee, inte....