SEBI Fines Stock Advisory Firm For False 95% Return Claims, Slams Its 'Cock And Bull Story'

The Securities and Exchange Board of India recently penalised a stock investment advisory firm, that lured investors with "95% returns" promise. The market regulator was also irked by the firm's arguments in its defence, calling it a "cock and bull story".

The case involves Sai Proficient Research Investment Advisory—which was fined Rs 19 lakh—and its proprietor, Meeshika Vishwakarma who were levelled with charges such as failure to comply with regulations, and fraudulent trade practices, among others.

However, what makes the case more intriguing is the defence offered by the accused and the regulator’s response to it.

Vishwakarma told the regulator that she was pregnant and was in the last months of her pregnancy and thus, could not attend the office regularly and could not cooperate with the investigation. When asked to appoint someone to represent herself, Vishwakarma submitted before SEBI that she was not in a state to do so because of her pregnancy complications. 

Notably, the market watchdog also found that Sai Proficient was associated with an unregistered investment advisory entity called Shree Sai Proficient Financial Services or SSPFS.

SEBI noted that this entity “was collecting money from its clients, dealt unfairly with its clients, extracted more money from them on the pretext of additional service charges, failed to resolve clients’ complaints within prescribed timelines, failed to submit material information w.r.t change in its registered address and also failed to disclose the registered office address in its website.”

Sai Proficient and SSPFS were also accused of colluding with each other to defraud the investors. 

At some point during these proceedings, the regulator also asked the firm to submit details like KYC, risk profiling, and suitability reports for all the clients. However, it was submitted by Sai Proficient that its data got corrupted during the outbreak of Covid-19 pandemic in 2020.

But SEBI found that no formal conversation between the firm and its service provider about asking for the information was provided. Instead, only a statement declining to provide the date due to the pandemic was made, the regulator noted.

SEBI mentioned in its observations that the Sai Proficient's stance in the proceedings is only a "cock and bull story" being made to escape the allegations.