Sebi bans Capital Heed Financial's proprietor for violating adviser rules

Sebi has barred Capital Heed Financial Research's sole proprietor Shailendra Sen from the capital markets for providing false information to the regulator in his application for registration

Sebi has barred Capital Heed Financial Research's sole proprietor Shailendra Sen from the capital markets for three years for providing false information to the regulator in his application for registration as an investment adviser.

While calculating the time period of debarment, Sebi said the period of restraint already undergone by Sen through the interim order will be adjusted.

In an interim order in November 2019, the regulator had barred Sen from the capital markets till further directions.

In its final order passed on Tuesday, Sebi noted that Sen, when seeking registration from the regulator as an investment adviser in his individual capacity, was under a statutory obligation to disclose his prior activities in relation to the securities market, including the unauthorised investor advisory activities undertaken by his partnership firm in a true and correct sense to the markets watchdog.

 

However, he has knowingly made a false declaration in his application form for registration as an investment adviser, stating that he was not engaged in investment advisory services prior to filing his application thereby has intentionally furnished false information to Sebi in violation of the code of conduct specified under-investment adviser (IA) rules, it added.

Moreover, Sen has also failed to disclose the fact of his earlier engagement in the activities of Cash Cow in the capacity of a partner the firm, even after the certificate of registration for Capital Heed was granted to him and such failure on the part of him to disclose such information, which was not disclosed at the time of obtaining the registration, has led to violation of the IA Regulations, the order noted.

At the same time, he has misrepresented to investors that it can provide portfolio management services (PMS) although it did not hold a certificate of registration from Sebi to do so, thereby violating PMS norms, it added.

Accordingly, the regulator has restrained Sen from "accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner whatsoever, for a period of three years".

Also, he has been directed to resolve the complaints, if any, pending against him in the SCORES and otherwise, within the period of 30 days.

In case of failure to comply with the directions, he will be prohibited from the capital markets for an additional period of two years or for such time all the complaints are resolved, whichever is later, Sebi said.

In a separate order, the regulator has barred Research Infotech from the capital markets for four years.

While calculating the period of the ban, the period of restraint already undergone on account of the interim order will be adjusted, Sebi said.

The regulator, through an interim order in December 2019, had barred Research Infotech from the capital markets till further directions.

Jasmeet Kaur Bagga is the sole proprietor of Research Infotech.

In its final order, Sebi noted that Research Infotech blatantly sidelined the interest of its clients by committing assured profits, charging high and unreasonable fees, extorting money from the clients under different self-created pretexts, involving in dishonest practices of seeking user ids and passwords so as to gain access to the trading accounts of the clients, among others.

It acted in a deceitful manner with a motive to induce the clients to buy its investment products or packages for maximising revenue.

By indulging in such activities, the entity violated the provisions of the code of conduct prescribed for IA rules and PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, Sebi said.