TaxTMI 
TaxTMI 
2025 (1) TMI 1675
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..../promoters, namely, Sh. Manish Kumar Goyal (MKG) and Sh. Shailesh Goyal (SG) were held to be not 'fit and proper' persons for grant of the registration as Portfolio Manager. Further, MSRAPL was directed not to apply for fresh registration as Portfolio Manager for a period of five years from the date of the order. 2. Brief facts of the case are as under: - MSRAPL had submitted to the Respondent, an application for registration as Portfolio Manager on October 30, 2020. MKG is 80% shareholder and SG 20% shareholder in MSRAPL. MKG had been proposed to be the Principal Officer for the proposed PM activity. MSRAPL already held registration with SEBI as an Investment Advisor (IA) since May 29, 2017 and MKG was also registered with SEBI as Research Analyst since May 16, 2017. 2.1 While scrutinizing the application of MSRAPL for registration as PM, SEBI found out that MKG did not fulfill the criteria under Regulation 7(2)(d)(ii) of SEBI (Portfolio Managers) Regulations, 2020, which required the Principal Officer to have at least five years' experience in "related activities in the securities market including in a portfolio manager, stock broker, investment advisor, research a....
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....order came to be passed on November 18, 2022. 3. We have heard Shri Manish Goel, Appellant in person and Shri Sumit Rai, learned counsel for the Respondent. 4. Before us, the Appellants' plea was that the rejection of their application for registration as PM and declaration of the Appellants and its directors as not 'fit and proper' is an act of vengeance on part of the Respondent. The Appellants had complained to the Chairman, SEBI and Finance Ministry regarding the delay in processing of their application and due to these complaints, the Respondent started harassing them which finally culminated in passing of the impugned order. 4.1 Further, claiming that while the SCN only sought reply as to why the application for registration as PM should not be rejected, the impugned order declared them as not 'fit and proper' and barred them from re-applying for further five years, the appellant sought that the impugned order should be struck down. Refuting the Respondent's finding about the Appellant's principal officer (MKG) not having requisite experience based on the evidence submitted by SPIL, Shri Goel submitted that the Appellant had submitted three concrete evidences in shap....
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....ants, SEBI acted within the four walls of the provisions of the regulations laid down, in observing that MKG did not fulfill the criteria that require a Principal Officer of an Applicant to have experience of at least 5 years in related activities in the securities market. Accordingly, relevant supporting documents were sought towards work experience of the proposed Principal Officer, MKG. The details submitted by MSRAPL included MKG's employment with Maco from August 2004 to May, 2006, which were found contradictory by the Respondent as information received from SPIL indicated that MKG was working in two CA firms at Delhi during August, 2005 to June, 2006. Thus, the Respondent was correct to arrive at a conclusion that by submitting false and misleading information to SEBI, the Appellants failed to meet the criteria of 'integrity, reputation and character' and could not be held to be 'fit and proper' persons so as to allow registration as PM. 5.3 Further, it was submitted that the Appellants have never denied employment of MKG in the two CA firms at Delhi and at Maco in Bangalore but have sought to suggest that MKG had been employed in more than one firm at different locations ....
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....o the work experience of MKG, as the proposed Principal Officer of the Appellant Company who is also 80% equity shareholder in MSRAPL. In our view, this is a crucial eligibility criteria and there should be no ambiguity regarding the Principal Officer of the Applicant meeting this criteria. We note that the Applicant did not originally provide the information regarding the work experience of MKG at Maco for consideration against work experience criteria. The Appellants did not give any satisfactory reason for this omission at the time of submitting application. As this experience in a broking firm would definitely fit in the desired criteria of 'related authorities in the securities market', its omission naturally raises the question as to why the same was not given. In our view, Respondent was correct in seeking verification of this work experience by calling for further information from the Applicant and later on not getting satisfactory responses, by seeking confirmation from a previous employer (SPIL). Once the discrepancy in work experience was noticed, the Respondent had to conclude the disclosure as false and misleading information with regard to work experience of MKG. We n....