SEBI cracks whip on investment adviser for non-disclosure to clients
Published: Jan 25, 2017
By TIOLCORP News Service
MUMBAI, JAN 25, 2017: THE Securities and Exchange Board of India (SEBI), has passed an order under sections 11(1), 11B and 11D of SEBI Act, 1992 against Capital Via Global Research Limited and its directors for violation of SEBI (Investment Advisers) Regulations, 2013 directing them:
i. not to solicit or undertake any fresh advisory business for another period of four months from the date of order.
ii. to discontinue the acceptance of funds from clients including by way of deactivation of online remittances, with immediate effect during the aforesaid four month period.
iii to disclose the contents of these directions prominently on its website(s) immediately.
CapitalVia Global Research, a SEBI registered investment adviser is having its registered office in Indore, Madhya Pradesh. In July, 2015 a complaint was filed against CapitalVia, which was followed by an inspection by the SEBI at the Indore office of CapitalVia. One such complaint alleged that CapitalVia charged a fee of Rs.25, 00,000/- for their services rendered wherein they promised an assured return of 10%. Pursuant to inspection SEBI noted that CapitalVia charged exorbitant fee to the extent of four times the amount of investment involved for which the Investment Advice was rendered. This indicated that CapitalVia was doing more than mere advisory services for its clients though the receipts are shown towards fees collected. The inspection revealed certain violations and non-compliances with the provisions of the IA Regulations. But SEBI observed that amongst the violations, the most serious violation is of non-disclosure to the clients including non-dissemination of restraint orders of SEBI, followed by the improper risk evaluation and dissemination processes.
The recent trend of similar orders passed by SEBI exposes the rampant unscrupulous practice by investment advisers especially in smaller cities and towns.
