The interim order passed against an unregistered investment advisory service for violation of SEBI guidelines and regulations -THE SECURITIES AND EXCHANGE BOARD OF INDIA
The interim order passed against an unregistered investment advisory service for violation of SEBI guidelines and regulations -THE SECURITIES AND EXCHANGE BOARD OF INDIA A complaint was made against a firm named ‘NIFM Research’ and allegations were made that the firm gave free tips to invest to the complainant and directed for the subscription fees In the account of Mr. Krishnamurthy G and the complainant made further allegations that he lost money while acting upon the recommendations and his request for refund of subscription fees was not heard. Acting upon the complaint an investigation was ordered by the whole-time member S. K. MOHANTY in application no. – WTM/SM/SRO/SRO/14716/2021-22 The preliminary examination showed that there are no records in its registered Intermediary database against the name ‘NIFM Research’ or ‘Krishnamurthy G’ and showed that they are not registered with  SEBI and the firm’s website is offering various investment advisory packages in different segments of the securities market and showed that the pa and showed that the payment made by the clients are transferred to Krishnamurthy bank account and It was further observed during an examination that Krishnamurthy was not registered with SEBI to act as an Investment Adviser in the securities markets and at the investment time several misleading claims were made for the payment of clients. From the investigation it is crystal clear that  Krishnamurthy was continuously luring gullible investors by offering investment advisory tips through the aforesaid website operated by him and was continuously collecting monies from the investors by offering them various investment packages in an unauthorized manner and therefore an interim order passed under Sections 11, 11(4), 11B(1) and 11D of the Securities and Exchange Board of India Act, 1992 and  Krishnamurthy were prima facie found to violate the provisions of Section 12(1) of the SEBI Act read with Regulation 3(1) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 to prevent Krishnamurthy from carrying on those illegal investment advisory services, which were prima-facie found to be being undertaken in violation of the provisions of SEBI Act and IA Regulations, 2013. Click here to read the order
WTM SM SRO SRO 14716 2021 22 SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: S. K. MOHANTY WHOLE TIME MEMBER UNDER SECTION 11(1) 11(4) AND 11B(1) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT 1992 Sl. No. Name of the Noticee 1. Mr. Krishnamurthy G. In respect of 1. Securities and Exchange Board of India received a complaint dated January 07 2020 wherein it was alleged that the complainant was approached by one firm called ‘NIFM Research’ which gave him two trading tips for free and thereafter directed him to pay subscription fee into the bank account of one Mr. Krishnamurthy G.both of which are in the name of 3.4. As per the information obtained from South Indian Bank with respect to the bank account No. 073XXXXXXXXXXX73 mentioned on the website it is noted that the account is in the name of Krishnamurthy. 3.5. As per the website hosting information the aforementioned website was created on August 01 2018 and was found active at the time of preliminary examination. 4. It was observed from website of TRA groups that two separate accounts one with South Indian Bank bearing account number 073XXXXXXXXXXX73 and another with PMC Bank bearing account number 32XXXXXXXXXXX07 both in the name of Krishnamurthy were mentioned under the head Bank Information. Confirmatory Order in respect of Krishnnamurthy G 5. It was further observed during examination that Krishnamurthy was not registered with SEBI to act as an Investment Adviser in the securities markets. 6. A further scrutiny of the aforesaid website showed that Krishnamurthy at the time of inviting the investors to invest in securities market as per various investment advisory services rendered to the clients was also making the following tall and misleading claims before the public through his website: TRA Groups is a leading Stocks and Commodity Advisory Company having a strong hold in providing most accurate Equity Tips as well as Commodity Tips. TRA Groups since its inception has grown in leaps & bounds providing quality services to Stock Brokers and Customers Full time traders and HNI. We maintain well qualified analysts supported by dynamic team who are skilled and impeccable in their analysis. TRA Groups is an Investment Advisory Company that produces and delivers tips and recommendations for... " TRA Group is the best research and analysis house for providing tips on MCX Commodity with high accuracy. At TRA Groups Our ultimate aim is creating true value for your investment through the essential technical analysis of our company our advisory. In today’s unpredictable volatile market these analyst using their experience and latest software tools are able to predict the movements in share market on time and with high accuracy. As a result using our tips our clients gain the most out of the share market. We try to provide you with firsthand information and advice which can prove to be profitable. We provide recommendations through SMS and Phone Call based on customer options. Our SMS facility is a very efficient system ensuring the instant delivery of Message without any loss of time with proper details. So the clients get adequate time to enter into the trade and fetch the profit. It enables us to maintain a large clientele base as compared to any other Advisory Services. We assure you and take the responsibility of providing you with an immediate alternative if in case you are stuck up in any position in market."Confirmatory Order in respect of Krishnnamurthy G 7. It is noted in the course of the said preliminary examination that the website www.tragroups.com was also containing information that it was offering packages in equity segment futures segmentoptions bullions base metals Energy and other commodities to its clients as part of its advisory activity. I note from the material available on record that the pricing for various investments advisory products being offered by Krishnamurthy as mentioned on the aforesaid website were as following: Table 1: Subscription plans: Sl. no Product Package One month Rs.) Three Months Six Months One Year Stock Cash 10 000 20 000 40 000 65 000 Stock Future 12 000 24 000 40 000 70 000 Nifty Future 8 000 16 000 30 000 45 000 Combo Equity 30 000 60 000 95 000 1 30 000 8 000 16 000 28 000 40 000 8. A thorough examination of the South Indian Bank Account no. 073XXXXXXXXXXX73 prima facie showed that Krishnamurthy has collected a total sum of INR 12 58 780 during the period of operations of the aforesaid bank account viz. December 2018 to May 28 2020 using which Krishnamurthy apparently conducted his advisory activities. 9. In the light of the fact that Krishnamurthy was continuously luring gullible investor by offering investment advisory tips through the aforesaid website operated by him and was continuously collecting monies from the investors by offering them various investment packages in an unauthorized manner it was deemed fit to take urgent proactive and preventive action in this matter to stop Krishnamurthy acting through his website www.tragroups.com from collecting any more fees from the public and from indulging in such unauthorized investment advisory activities. Therefore an ex parte ad Interim Order dated September 07 2020 Confirmatory Order in respect of Krishnnamurthy G under Sections 11 11(4) 11B(1) and 11D of the Securities and Exchange Board of India Act 1992was passed wherein the above activities of Krishnamurthy were prime facie found to be in violation of the provisions of Section 12(1) of the SEBI Act read with Regulation 3(1) of the Securities and Exchange Board of IndiaRegulations 2013Krishnamurthy G. is directed to: i. Cease and desist from acting as an investment advisor including the activity of acting and representing through any media as an investment advisor directly or indirectly and cease to solicit or undertake such activity or any other activities in the securities market directly or indirectly in any matter whatsoever until further ii. Not to divert any funds raised from investors kept in bank account(s) and or in their custody until further orders. iii. Not to dispose of or alienate any assets whether movable or immovable or any interest or investment or charge on any of such assets held in their name including money lying in bank accounts except with the prior permission of SEBI. Immediately withdraw and remove all advertisements representations literatures brochures materials publications documents communications etc. in relation to their Confirmatory Order in respect of Krishnnamurthy G investment advisory activity or any other unregistered activity in the securities market until further orders. v. Not to access the securities market and buy sell or otherwise deal in securities in any manner whatsoever directly or indirectly until further orders. If Krishnamurthy has any open positions in any exchange traded derivative contracts as on the date of the order they can close out square off such open positions within 3 months from the date of order or at the expiry of such contracts whichever is earlier. Krishnamurthy is permitted to settle the pay in and pay out obligations in respect of transactions if any which have taken place before the close of trading on the date of this vii. To provide a full inventory of all assets held in his name whether movable or immovable or any interest or investment or charge on any of such assets including details of all bank accounts demat accounts and mutual fund investments immediately but not later than 5 working days from the date of receipt of this order. South Indian Bank and PMC Bank wherein Krishnamurthy is holding bank accounts are directed not to allow any debits withdrawals from and credits to the said accounts without the permission of SEBI. The Banks are directed to ensure that all the above directions are strictly ix. The Depositories are directed to ensure that till further directions no debits are made in the demat accounts of Krishnamurthy. x. The Registrar and Transfer Agents are also directed to ensure that till further directions the securities including Mutual Fund units held in the name of Krishnamurthy is not transferred or redeemed. 11. The aforementioned Interim Order issued to Krishnamurthy was based on certain prima facie observations which were made on the basis of the material available on record and the Interim Order was based on the above narrated prima facie case and keeping in view of the balance of convenience in the interest of investors. In this context it is noted that the Interim Order contains a provision affording 21 days’ Confirmatory Order in respect of Krishnnamurthy G time to Krishnamurthy to file his objections if any and to avail an opportunity of personal hearing before SEBI on a date and time to be fixed in that regard. 12. I note from the records available before me that the Interim Order was delivered to Krishnamurthy at his address through SPAD on September 28 2020 the proof of such delivery is available on record. However no reply on behalf of Krishnamurthy has been received in this regard. Subsequently a letter dated July 06 2021 was again sent to Krishnamurthy advising him to submit his reply to the allegations and prima facie observations made in the Interim Order. The said letter was again delivered to Krishnamurthy but no reply was received from his end. 13. Subsequently in the interest of Principles of Natural Justice an opportunity of personal hearing was granted to Krishnamurthy on December 08 2021. The said hearing notice dated July 26 2021 was also delivered to him vide SPAD as well as email dated July 26 2021. However no one appeared on behalf of Krishnamurthy on the scheduled date. 14. In this regard I find that the facts at this stage are clear to make a prima facie view that Krishnamurthy was running an investment advisory service through his website www.tragroups.com wherein he was providing various packages to the gullible investors in equity futures options as well as commodities segment of Securities market. In fact it was clearly mentioned on the aforementioned website that ‘TRA Groups is an investment advisory company’. At the same time the name of Krishnamurthy was not found in the list of Registered Investment Advisors with SEBI. 15. On the other hand I find that Krishnamurthy has failed to avail various opportunities provided to him to present his case. Further no material has been found by SEBI since passing of the Interim Order which would warrant any change in the directions passed in the Interim Order. 16. In view of the above I find no reason to deviate from the prima facie findings recorded in the Interim Order that Krishnamurthy was running an unregistered investment advisory service through his website www.tragroups.com. By running such activity in proscribed manner Krishnamurthy has appeared to have deceived Confirmatory Order in respect of Krishnnamurthy G a number of gullible investors one of which filed a complaint dated January 07 2019 before SEBI. By running such activity Krishnamurthy prima facie collected INR 12 58 780 in his bank account with South Indian Bank. Further detailed investigation in respect to his collection of funds in his bank account with PMC Bank as well as in other bank accounts if any is being conducted simultaneously. Pending examination investigation I find no reason to modify the directions issued under the Interim Order and consequently hereby confirm the directions made with respect to Krishnamurthy in the Interim Order. 17. This Order shall come into force with immediate effect. 18. A copy of this Order shall be served upon Krishnamurthy G all the recognized Stock Exchanges Depositories registrar and transfer agents and Banks for necessary compliance with the above directions. DATE: January 12 2022 PLACE: Mumbai Sd S. K. MOHANTY WHOLE TIME MEMBER Confirmatory Order in respect of Krishnnamurthy G 