w w w . L a w y e r S e r v i c e s . i n



Capvision Investment Advisor, Indore v/s Securities & Exchange Board of India, SEBI Bhavan


Company & Directors' Information:- P V T INVESTMENT LIMITED [Amalgamated] CIN = U74899DL1988PLC121600

Company & Directors' Information:- P V T INVESTMENT LTD [Not available for efiling] CIN = U67120PB1988PLC008068

Company & Directors' Information:- S T INVESTMENT PRIVATE LIMITED [Amalgamated] CIN = U65993WB1990PTC050032

Company & Directors' Information:- H. L. INVESTMENT COMPANY LIMITED [Amalgamated] CIN = U65990WB1975PLC128186

Company & Directors' Information:- M M INVESTMENT PRIVATE LIMITED [Converted to LLP] CIN = U65921CT2008PTC020533

Company & Directors' Information:- G. N. G. INVESTMENT LIMITED [Active] CIN = U65910GJ1981PLC004128

Company & Directors' Information:- A S G S INVESTMENT PRIVATE LIMITED [Active] CIN = U74120DL2008PTC173938

Company & Directors' Information:- G L INVESTMENT PVT LTD [Active] CIN = U65993WB1991PTC051072

Company & Directors' Information:- C & C INVESTMENT LTD [Active] CIN = U67120AS1976PLC001654

Company & Directors' Information:- S M S INVESTMENT CORPORATION PRIVATE LIMITED [Active] CIN = U74899DL1963PTC003988

Company & Directors' Information:- V R V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120WB1985PTC039793

Company & Directors' Information:- S P INVESTMENT PVT LTD [Active] CIN = U70109WB1961PTC025099

Company & Directors' Information:- R H INVESTMENT PRIVATE LIMITED [Active] CIN = U99999MH1978PTC020633

Company & Directors' Information:- T N B INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1986PTC025590

Company & Directors' Information:- A R S INVESTMENT PVT LTD [Active] CIN = U65993WB1990PTC048513

Company & Directors' Information:- V P INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015714

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- S M D INVESTMENT LIMITED [Strike Off] CIN = U65993TN1995PLC033139

Company & Directors' Information:- G R D INVESTMENT PVT LTD [Amalgamated] CIN = U67120WB1980PTC032727

Company & Directors' Information:- C AND N INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015710

Company & Directors' Information:- R INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993TZ1988PTC002181

Company & Directors' Information:- H N G L INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1995PTC066774

Company & Directors' Information:- K M S INVESTMENT PRIVATE LIMITED [Active] CIN = U67120UP1993PTC015287

Company & Directors' Information:- S A D SECURITIES AND INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U67120DL1996PTC076037

Company & Directors' Information:- U M INVESTMENT PVT LTD [Active] CIN = U70101WB1979PTC032160

Company & Directors' Information:- A S T INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U67120DL1996PTC082812

Company & Directors' Information:- B N E INVESTMENT LTD [Not available for efiling] CIN = U67120WB1974PLC029360

Company & Directors' Information:- K S J INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U74899DL1994PTC061335

Company & Directors' Information:- V P SECURITIES AND INVESTMENT PRIVATE LIMITED [Active] CIN = U65910GJ1994PTC022905

Company & Directors' Information:- P T INVESTMENT PVT LTD [Strike Off] CIN = U65999WB1995PTC067065

Company & Directors' Information:- K. S. R. INVESTMENT LIMITED [Strike Off] CIN = U65992UP1988PLC010253

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- J T INVESTMENT PVT LTD [Strike Off] CIN = U65923WB1979PTC032344

Company & Directors' Information:- R K INVESTMENT LTD [Strike Off] CIN = U65993WB1969PLC027398

Company & Directors' Information:- N M G C INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U74899DL1982PTC014603

Company & Directors' Information:- T M INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028172

Company & Directors' Information:- S. A. F. INVESTMENT LIMITED [Active] CIN = U67120DL1997PLC088611

Company & Directors' Information:- H K (INVESTMENT) COMPANY PRIVATE LIMITED [Active] CIN = U65990GJ1950PTC000511

Company & Directors' Information:- P N INVESTMENT PRIVATE LIMITED [Under Liquidation] CIN = U65910GJ1988PTC010715

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Under Liquidation] CIN = U65993KL1942PLC000449

Company & Directors' Information:- S R M INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC031888

Company & Directors' Information:- A TO Z INVESTMENT PVT LTD [Dissolved] CIN = U67120WB1988PTC044464

Company & Directors' Information:- R J INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1976PTC018954

Company & Directors' Information:- B N K INVESTMENT CO PVT LTD [Active] CIN = U65993WB1971PTC028169

Company & Directors' Information:- A D INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028170

Company & Directors' Information:- T D INVESTMENT CO PVT LTD [Strike Off] CIN = U65921CH1987PTC007637

Company & Directors' Information:- C G K INVESTMENT P LTD [Strike Off] CIN = U65910AP1986PTC006088

Company & Directors' Information:- A J ADVISOR PRIVATE LIMITED [Active] CIN = U51109WB2005PTC104678

Company & Directors' Information:- L D INVESTMENT COMPANY PVT LTD [Strike Off] CIN = U65921HP1988PTC008425

Company & Directors' Information:- G K INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001919

Company & Directors' Information:- G V INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001920

Company & Directors' Information:- B C K H INVESTMENT CO PVT LTD [Active] CIN = U67120MH1982PTC026819

Company & Directors' Information:- H V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1997PTC107686

Company & Directors' Information:- M L INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC032180

Company & Directors' Information:- S & G INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U65100DL2012PTC244271

Company & Directors' Information:- INDORE SECURITIES PRIVATE LIMITED [Strike Off] CIN = U67120MP2009PTC021609

Company & Directors' Information:- S B INVESTMENT PVT LTD [Liquidated] CIN = U99999RJ1959PTC001090

Company & Directors' Information:- R AND P INVESTMENT PVT LTD [Strike Off] CIN = U67120PB1995PTC016124

Company & Directors' Information:- M M B INVESTMENT PRIVATE LIMITED [Active] CIN = U65993RJ1996PTC012698

Company & Directors' Information:- M G A INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U99999MH1980PTC022406

Company & Directors' Information:- D S N INVESTMENT PVT LTD [Strike Off] CIN = U65993TG1988PTC008554

Company & Directors' Information:- V. I INVESTMENT PVT LTD [Strike Off] CIN = U67120HR1988PTC030206

Company & Directors' Information:- R J P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993GJ1981PTC004678

Company & Directors' Information:- D D P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65910GJ1981PTC004695

Company & Directors' Information:- C J P INVESTMENT PVT LTD [Strike Off] CIN = U99999GJ1981PTC004662

Company & Directors' Information:- M P INVESTMENT CO PRIVATE LIMITED [Under Process of Striking Off] CIN = U65993KA1974PTC002646

Company & Directors' Information:- INVESTMENT COMPANY PRIVATE LIMITED [Dissolved] CIN = U65990KL1946PTC000461

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Not available for efiling] CIN = U99999MH1943PLC007730

    Appeal No. 40 of 2018

    Decided On, 25 September 2019

    At, SEBI Securities amp Exchange Board of India Securities Appellate Tribunal

    By, THE HONOURABLE MR. JUSTICE TARUN AGARWALA
    By, PRESIDING OFFICER & THE HONOURABLE DR. C.K.G. NAIR
    By, MEMBER

    For the Appellant: Vedchetan Patil, Advocate. For the Respondent: Vishal Kanade, Chirag Bhavsar, Advocates i/b MDP & Partners.



Judgment Text

Dr. C.K.G. Nair, Member

1. The Adjudicating Officer (‘AO’ for short) of the Securities and Exchange Board of India (‘SEBI’ for short) vide order dated November 28, 2017 imposed a penalty of Rs. 16 lakh on the appellant (Rs. 8 lakh each for violation of Code of Conduct and for non redressal of client grievances) under Section 15 HB of the SEBI Act, 1992. This appeal has been filed aggrieved by the said order.

2. Appellant is an investment advisor registered with SEBI. On January 3, 2015 SEBI received a complaint in its SCORES platform from one Mr. Devashish Vimal alleging that the appellant misappropriated some money from the complainant paid towards commodity trading. Given the prima facie violation of Regulation 15(9) and 21(1) of the SEBI (Investment Advisor) Regulations, 2013 (‘Investment Advisor Regulations’ for short) SEBI initiated an adjudication proceeding and a show cause notice dated July 14, 2017 was issued to the appellant. It was alleged in the show cause notice that the employee / representative of the appellant persuaded the complainant to trade in commodities and to transfer money for the said purpose to open a trading account. All these have been done through the messaging system of the representative / employee of the appellant rather than through the company’s own general messaging system. It was also alleged that when the complainant wanted to close the account and withdraw the balance money available the appellant did not respond to the same. Moreover, the appellant induced the complainant through a fake trading account in the guise of a MCX account and sent false trading messages to the complainant and therefore did not act honestly, fairly and in the best interests of the complainant. By these acts of commission the appellant had violated Regulation 15(9) and 21(1) of the Investment Advisor Regulations which are reproduced for convenience:-

Investment Adviser Regulations

“General responsibility.

15(9) An investment adviser shall abide by Code of Conduct as specified in Third Schedule.

Third Schedule

CODE OF CONDUCT FOR INVESTMENT ADVISER

1. Honesty and Fairness

An investment adviser shall act honestly, fairly and in the best interests of the clients and in the integrity of the market.

2. Diligence

An investment adviser shall act with due skill, care and diligence in the best interests of its clients and shall ensure that its advice is offered after thorough analysis and taking into account available alternatives.

Redressal of client grievances

21(1) An investment adviser shall redress client grievances promptly.”

3. The Learned counsel for the appellant Shri Vedchetan Patil submitted that the appellant Company did not commit any violations because it is an action / mistake made by an employee without the knowledge of the Company. Therefore, instead of system generated SMSs the employee sent messages from his own cell phone. When the Company came to know of this, action was taken against the employee by dismissing him and out of the amount of Rs. 3,37,000/- deposited by the complainant to open a trading account, Rs. 2,50,000/- has been repaid to the complainant deducting the balance amount against the services provided for investment advice. Accordingly, since it is not a mistake on the part of the appellant; the concerned employee has already been terminated and money of the complainant has been returned, the appellant has complied with the requirement. Moreover, the complainant had become a member for availing services of the appellant voluntarily and after receiving complete disclosure relating to the terms and conditions of such services.

4. Learned counsel for the respondent SEBI Shri Vishal Kanade stated that the appellant was carrying out commodity broking in the guise of providing investment advice. The Account No. ‘MCX 4661’ etc. were clearly creations of such unauthorized transactions and was not even registered with the Multi Commodity Exchange of India. Rs. 2,50,000/- of refund agreed to be returned to the complainant was not fully paid initially as two cheques worth Rs. 1 lakh had bounced and only after substantial follow up and after long time the said amount was paid. In the light of this an investment adviser who was expected to provide honest and sincere advice to its clients itself was misguiding its client as well as misusing client funds. Further, they were not responsive to the complaints made by the clients and substantive follow up had to be done by SEBI for even partially settling the matter. Therefore, it was contended that there is no fault in the findings in the impugned order that the appellant had violated the Code of Conduct of an investment adviser and failed to redress the grievances of its clients and therefore the penalty imposed is just and fair.

5. We have heard the learned counsel for the parties and perused the documents produced before us. The records before us confirmed that the appellant had violated the stated provisions of the Investment Advisor Regulations and conducted its business without proper care and diligence thereby resulting in losses to its clients. It is also found from the records that the complaint lodged in the SCORES platform on January 3, 2015 was even partially settled only by March 2016.

6. The learned counsel for the appellant sought to get some relief in the amount of penalty of Rs. 16 lakh imposed by the impugned order. Given the fact that appellant is only a small investment adviser and the amount involved in the matter is only Rs. 3,37,000/- penalty of Rs. 16 lakh imposed under Section 15 HB of the SEBI Act where the maximum penalty imposable is upto Rs. 1 crore appears disproportionate. We are of the view that Rs. 16 lakh is disproportionate vis--vis violations committed. At the same time we are not inclined to reduce this amount substantially because we note that this is not the first time th

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e appellant has committed an offence. Earlier, appellant was punished for carrying on investment adviser business without obtaining SEBI registration which was also upheld by this Tribunal vide its order dated November 2, 2017 in Appeal No. 423 of 2016 (Capvision Investment Advisors vs. SEBI). By taking all these factors into account and by balancing them we are of the view that some mitigation is in the interest of justice. 7. Accordingly, consolidated penalty of Rs. 16 lakh is reduced to Rs. 8 lakh which shall be paid by the appellant to SEBI within four weeks from the date of this order. 8. Appeal is partially allowed with no orders on costs.
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