Ignorance of the law cannot be used as an excuse to consider unauthorized activities within the provision of law -THE SECURITIES AND EXCHANGE BOARD OF INDIA
Ignorance of the law cannot be used as an excuse to consider unauthorized activities within the provision of law -THE SECURITIES AND EXCHANGE BOARD OF INDIA Securities and Exchange Board of India received several complaints against M/s. Cash Cow Broking &amp; Advisory Solutions and various allegations that the cash cow is engaged in  ‘investment advisory services’ without having proper registration for it under SEBI Act, 1992 and “IA Regulations, 2013” receiving these complaints an examination was conducted against cash cow company by ANANTA BARUA WHOLE TIME MEMBER  in application no -WTM/AB/WRO/WRO/14741/2021-22. In the investigation it was found that the firm was engaged in providing advisory services about stocks, commodities, currency, Agri, etc., research is based upon fundamental &amp; technical analysis of all counters, scripts, &amp; indexes. And other advisory services for which the firm does not have validation and various complaints were made against the firm and various allegations that that Cash Cow had promised that they will get good returns from the market and transaction were also recorded and found out that company received funds in its bank accounts and has mobilized a huge amount of money through the website. A show-cause notice sends to the noticees alleging that noticees have carried out investment advisory activities without obtaining a certificate of registration from SEBI. And have violated Section 12(1) of SEBI Act, 1992 read with Regulation 3(1) of the IA Regulations, 2013 and asked for the reason why the firm was acting in violation of under sections 11(1), 11(4) and 11B of the SEBI Act, 1992 for violation of section 12(1) of the SEBI Act, 1992 read with regulation 3(1) of the IA Regulations, 2013. And providing advisory services. The noticee no.2 presented their defense on behalf of all others and responding to it was found that Noticees were engaged in the business of providing investment advice to the public, for consideration and were thus, acting as an investment adviser, as defined under Regulation 2(1) (m) of the IA Regulations, 2013. And it is a well-settled law that ignorance of the law is no excuse. Hence, the Noticees cannot take the plea that they had the genuine and bonafide belief that the said business was well within the scope of work of an authorized person of a sub-broker as the provisions of the SEBI Act, 1992 and the IA Regulations, 2013 are clear in this regard that a person must obtain a certificate of registration before acting as an investment advisor and to protect the interest of investors and to maintain the integrity of the securities market, IA Regulations, 2013 provides safeguards to ensure that the investors who receive investment advice are protected. One such safeguard is that any person carrying out investment advisory activities has to obtain registration from SEBI as required under Regulation 3(1) of the IA Regulations, 2013.  From the further submissions made by the noticee, it was found out that false declaration in his application form for registration as an investment adviser under the proprietorship concern named ‘Capital Heed Financial Research’ before SEBI, stating that he was not engaged in investment advisory services before filing his application and thereby had intentionally furnished a false/misleading/wrong information to SEBI it shows that the conduct of firm was dubious and not genuine. Hence these activities/ representations as being made by the Noticees without holding the certificate of registration as investment adviser violate Section 12(1) of SEBI Act, 1992 read with Regulation 3(1) of the IA Regulations, 2013. And direction issued to noticees under Sections 11(1), 11(4), and 11B, read with of Section 19 of the SEBI Act, 1992.
Final Order in the matter of Cash Cow Broking & Advisory Solutions WTM AB WRO WRO 14741 2021 22 SECURITIES AND EXCHANGE BOARD OF INDIA FINAL ORDER UNDER SECTIONS 11 11(4) and 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT 1992. In respect of: No. Name of the entity PAN No. M s. Cash Cow Broking & Advisory Solutions Mr. Shailendra SenMr. Amit JainMr. Chirag SharmaIn the matter of Cash Cow Broking & Advisory Solutions Aforesaid entities are hereinafter individually referred to as by their respective name or noticee number and collectively as “the Noticees”.) 1. Securities and Exchange Board of India had received complaints against M s. Cash Cow Broking & Advisory Solutions hereinafter referred to as “Cash Cow”) wherein it was prima facie alleged that that Cash Cow was engaged in ‘investment advisory services’ without having the requisite registration as mandated under the Securities and Exchange Board of India Act 1992and SEBIRegulations 2013 Mr. Amit Jainand Mr. Chirag SharmaThe website www.cashcowresearch.com of the Noticees was browsed for information but the same was not active at that time. The archive pages of the website was downloaded from www.archive.org to gather information. From the pages downloaded it was observed that the Noticees had disclosed the following in its website: i) Cash Cow is a leading financial services company in area of broking and advisory industries in India. We at Cash Cow provide broking platform for online offline trading @ very low brokerage of 0.015 paisa. In broking we have registered in all exchanges NSE BSE MCX NCDEX MCX SX. In advisory about stocks commodity currency agri etc. research is based upon fundamental & technical analysis of all ii) We offer Advisory Services Broking Services Portfolio Services and counters scripts & indexes. Fund Management. iii) Portfolio Services: In this service we provide you an efficient return on your investment with transparency. iv) Advisory Services: In this service we provide you recommendation in all segments such as Stock cash Stock future Tips BTST Tips Forex etc. v) Various packages were being offered for subscription at specified rates and for specific products. One such illustration is given below: Stock Future Tips This service is for the traders who trade in Stock Future. These Stock Future Tips are the after effect of center exploration and investigation and help you to get a huge profit. Our call via SMS will reach you as soon as the analysts send so there is no time lag between you reading it and working on the call. The fee ranges from Rs.8 000 per month to Rs.48 000 yearly. vi) The payment to subscribe to the services can be made directly to the bank accounts opened in the name of Cash Cow with ICICI Bank Axis Bank and Central Bank of India the details of which were mentioned on their website. Alternatively payments can be made through PayU Money. vii) A search was also made on the internet to gather any other information about Cash Cow. It was observed that there were Final Order in the matter of Cash Cow Broking & Advisory Solutions complaints on www.consumercomplaints.in wherein the complainants have alleged that Cash Cow had promised that they will get good returns from the market. b) The Account Opening Forms KYC documents and transaction account statements of bank accounts of Cash Cow obtained from ICICI Bank Axis Bank and Central Bank of India were examined and the following observations were made: ICICI Banki) A c No. 657305500056 was opened in March 2013 in the name of partnership firm Cash Cow having its address at G2 Suryansh Exotika Block E 94 Alok Nagar Kanadiya Road Indore. ii) The email id is cashcowbroking@gmail.com and PAN: AAIFC2855R. iii) The partners are Mr. Amit Jain and Mr. Shailendra Sen. iv) The industry is mentioned as Commodities Broking and Advisory. v) The A c no. 657305500056 did not have many transactions and received Rs.15 000 during June 2014 to August 2014. vi) With respect to A c no. 004105014315 the entity had received credits aggregating to Rs. 10 81 521 during June 2015 to February vii) Balance amount available in the a c as on February 24 2017 is 2017. Rs.77 037 . viii) Analysis of bank account revealed that there were 126 credit transactions which were in round figure ranging from Rs.1 000 to Rs.1 00 051 aggregating to Rs.10 81 521 . The credits were mainly in the form of cash deposits and mobile money transfers. 2) Axis Banki) A c No. 915020002699502 was opened in January 2015 in the name of partnership firm Cash Cow having its address at G2 Suryansh Exotika Block E 94 Alok Nagar Kanadiya Road Indore. ii) The email id is shailendra.sen@cashcowresearch.com and PAN: AAIFC2855R. Final Order in the matter of Cash Cow Broking & Advisory Solutions iii) The partners are Mr. Shailendra Sen and Mr. Chirag Sharma. iv) As per the AOF the type of business activity is advisory service. v) The entity has received credits aggregating to Rs. 24 80 873 during the period January 2015 and February 2017. Out of the said amount of Rs. 24 80 873 credited into Axis Bank account from PayU Money amounted to Rs. 10 34 361 . vi) Credits from PayU Money were observed during the period December 2016 and February 2017. The credit amounts received through PayU Money appear to be fees paid by clients for the purpose of investment vii) Balance amount available in the account as on February 27 2017 is advisory services. Rs.1 80 143 . viii) Analysis of bank account revealed that there were 95 credit transactions which were in round figure ranging from Rs. 500 to Rs. 1 00 000 aggregating to Rs.14 46 512 excluding payment gateways). These amounts appeared to have been collected as an advisory fee. 3) Central Bank of Indiai) The entity has received credits aggregating to Rs. 29 89 169 during the period August 2014 and December 2016. Out of Rs. 29 89 169 credits from PayU Money amounted to Rs. 27 88 169 . ii) Credits from PayU Money were observed to be during the period August 2014 and December 2016. The credit amounts received through PayU Money appear to be fees paid by clients for the purpose of investment advisory services. iii) Balance amount available in the Account as on January 28 2019 is Rs. 1 689 . iv) The bank was unable to provide a copy of the AoF of the entity since the records were not traceable due to the branch office being flooded with water in 2013 and majority of records were damaged but has informed that as per the date available in their software the account was opened by Partners Mr. Shailendra Sen and Mr. Amit Jain. Final Order in the matter of Cash Cow Broking & Advisory Solutions 4) A tabular depiction of money credited into the various bank accounts held by cash cow is as under: Bank Account No Aggregate Value of Credit Transactions in Rs.) ICICI Bank A c No. Axis Bank A c No. Central Bank A c No. October 2015 to July 2017 October 2015 to Oct 2017 August 2014 December 2016 4. Credits through PayU Money 10 81 521 24 80 873 29 89 169 65 51 563 38 22 530 c) Further complaints filed against Cash Cow were examined and the details of the same are as under: i) Mr. Vikram Oswal has inter alia alleged that he paid Rs. 10 000 on January 7 2017 for profit commitment base planin which Cash Cow has committed to give minimum profit of Rs. 80 000 in 30 days. From the email dated January 7 2017 sent by Cash Cow to the complainant it is seen that Cash Cow was providing investment advisory activity without obtaining a certificate of registration as an investment adviser from SEBI. The relevant extract of the said e mail is reproduced below. Subscription details Payment Mode: Payment Gateway Amount: 10000 Payment Date: 2017 01 07 Invoice No: INV431 Service details Services Pack: PCB Pack Start date: 2017 01 09 Expiry date: 2017 02 12 Cash Cow strictly follow Trading principles and Stop Loss policy wherein Customer by default agree to not do enter any trade without defined Stop Loss. Final Order in the matter of Cash Cow Broking & Advisory Solutions ii) Mr. Devesh has alleged that he has been receiving SMSs from Cash Cow asking him to subscribe to their services. Mr. Devesh has submitted copy of SMSs received in March 2015 extract of which is given below: Stock future Pack: SEL IDFC MAR FUTURE BELOW 171.50 SL 172.60 TGTS 170.50 169.50 Cash cow research Stock Future Pack: Ist TARGET ACHIEVED IN IDFC MAR FUTURE SELL HOPE YOU BOOKED PROFIT Stock Future Pack: Kindly exit from ONGC MAR FUT BUY CALL d) SEBI sent a letter dated March 14 2016 to the entity’s address in Orbit Mall Vijay Nagar Indore seeking information about unregistered investment advisory activities. Mr. Shailendra Senon behalf of Cash Cow vide its letter dated March 23 2016 had inter alia submitted the following: i) They had incorporated the partnership firm on September 05 2012 with 2 partners Mr. Amit Jain and Mr. Shailendra Sen joined as a partner on October 15 2014. The objective of the partnership was to offer broking services internet sales and advisory services. ii) They initiated only broking and internet sales in the years 2012 14. They initiated advisory services in the month of August 2014 and the revenue from advisory services is only Rs.1 90 800 collected from 22 clients. iii) The office was shifted from Alok Nagar to Orbit mall in January 2015. iv) That they were of an understanding that since they are registered as a sub broker and as mentioned in regulation 4of SEBI IA Regulations 2013 granting exemption to sub broker exempts requirement of getting registered. However post receiving SEBI letter they now know that they are required to get registered as an Investment Final Order in the matter of Cash Cow Broking & Advisory Solutions Advisor besides being an Authorized Person. They have stopped offering advisory services with immediate effect and shall offer such advisory only once they are registered for which they shall make an application in the required format as soon as possible. Further that requisite changes have been made in the website to ensure that no advisory sales are conducted from their website. e) However an examination of the bank accounts revealed that Cash Cow had received payments towards advisory business subsequent to its submission to SEBI in March 2016. It was observed that Cash Cow had received payments amounting to Rs.23 48 652 through Pay U Money gateway during the period April 2016 to February 2017. Further Cash Cow had also received cash deposits and credits amounting to Rs.15 15 805 during the period April 2016 to February 2017 in their Bank accounts subsequent to their submission to SEBI that they would stop their advisory business. f) Accordingly it was prima face observed that: a. Cash Cow and its partners were carrying out unregistered investment advisory activity without obtaining registration from SEBI and through their website mobilized a sum of Rs. 65.51 lakhs during the period August 2014 to October 2017. Cash Cow vide its letter dated March 23 2016 to SEBI had also accepted that it was providing advisory services from August 2014 and was not aware that SEBI registration was necessary. Further Cash Cow also submitted that it would stop rendering such services and make changes to its website. b. Subsequent to submissions to SEBI in March 2016 that they will close their business Cash Cow has mobilized Rs. 38 64 457 during the period April 2016 to October 2017. c. Cash Cow Broking is also registered as Authorized Person with Angel Broking Ltd and Angel Commodities Broking Pvt. Ltd. In view of the above a show cause notice was issued to the Noticees on March 12 2020alleging that the Noticees have carried out investment advisory activities without obtaining a certificate of registration from Final Order in the matter of Cash Cow Broking & Advisory Solutions SEBI. Accordingly it was alleged that the Noticees have violated Section 12(1) of SEBI Act 1992 read with Regulation 3(1) of the IA Regulations 2013. The SCN called upon the Noticees to show cause as to why suitable directions including debarment from securities market refund of fees collected non association with listed entities intermediaries etc. should not be passed under sections 11(1) 11(4) and 11B of the SEBI Act 1992 for violation of section 12(1) of the SEBI Act 1992 read with regulation 3(1) of the IA Regulations 2013. 4. The Noticees were provided with the opportunity to file their objections reply if any within 21 days from the receipt of SCN and were also provided with an opportunity of personal hearing before SEBI. The Noticees filed their reply to the SCN vide letter dated April 06 2020. The matter was then placed before me on August 05 2021 and following the principles of natural justice an opportunity of personal hearing was granted to the Noticees on September 23 2021. On September 23 2021 Noticee no. 2 appeared on behalf of all the Noticees and made submissions. The Noticee no. 2 also sought time to file written submissions and accordingly ten days’ time was granted to the Noticees to file their written submissions. Thereafter the Noticee no. 2 filed written submissions on October 05 2021. the following submissions: 5. The Noticees vide letters dated April 06 2020 and October 05 2021 have made a. By way of a partnership deed dated September 05 2012 a partnership firm in the name and style of Cash Cow Broking & Advisory came to be constituted which initially comprised of two partners namely Shri Amit Jain and myself and thereafter on October 15 2014 a third partner Shri Chirag Sharma joined b. The firm partners were carrying on activities as an Authorised Person and not Cash Cow. as an Investment Advisor. c. That on March 14 2016 when SEBI wrote a letter to Cash Cow firm seeking information about the alleged role as an Investment Advisor they had ceased the operations of Cash Cow with immediate effect. However because of our earlier commitments they were compelled to service the existing clients upto Final Order in the matter of Cash Cow Broking & Advisory Solutions February 2017 in order to achieve a proper closure to the operations mainly as regards our operations and also to minimize the losses of then existing clients. However it may be noted the partnership firm stood dissolved w.e.f. March 29 2017 and no new clients were on board from April 2016 pursuant to the SEBI notice. d. Further without prejudice to what has been said herein and assuming for the sake of argument and without admitting that Cash Cow or myself in my personal capacity were engaged in services as an Investment Advisor I submit that the services were being provided under genuine and a bona fide belief that the said business was well within the scope of work of an authorised person of a sub broker and that the Partners was not required to obtain any separate registration as an investment advisor and that they were not in violation of any SEBI Regulations. e. Further I wish to point out that I have cleared my investment advisor examination conducted by National Institute of Securities Market and on September 11 2017 I applied before SEBI for grant of certificate of registration as an investment advisor under the proprietorship concern named Capital Heed Financial Research and the registration was duly granted w.e.f. December 29 2017 and hence without prejudice to what has been said herein and assuming for the sake of argument and without admitting that Cash Cow or myself in my personal capacity were engaged as an investment advisor I say that any alleged violation that I may have committed in good faith during the period between August 2014 to Feb 2017 may be pardoned. I had already suffered a lot of losses due to Covid 19 and interim order received from SEBI in Nov 18 2019 for not doing any new or existing sales in my SEBI registered firm Capital Heed Financial Research and I did 100% compliance as said by SEBI. In the final order in the matter of Capital Heed Financial Research I am already banned for three years from securities market. Mr. Chirag Sharma and Mr. Amit Jain left fully of the working of investment advisory and broking since end of February 2017. And even before they were not actively participate in the working of cash cow. I note that the definition of investment adviser as given in Regulation 2(1)(m) of IA Regulations 2013 provides that investment adviser means “any person who for Final Order in the matter of Cash Cow Broking & Advisory Solutions consideration is engaged in the business of providing investment advice to clients or other persons or group of persons and includes any person who holds out himself as an investment adviser by whatever name called”. Regulation 2(1)of the IA Regulations defines investment advice as “advice relating to investing in purchasing selling or otherwise dealing in securities or investment products and advice on investment portfolio containing securities or investment products whether written oral or through any other means of communication for the benefit of the client and shall include financial planning.” I note that the Noticees had a website www.cashcowresearch.com and the Noticees had inter alia claimed on its website that it is providing investment advisory services and that they offer recommendation in all segments such as stock cash stock future tips BTST tips forex etc. As per the website they offered various packages for subscription at specified rates and for specific products. One such illustration is given below: Stock Future Tips This service is for the traders who trade in Stock Future. These Stock Future Tips are the after effect of center exploration and investigation and help you to get a huge profit. Our call via SMS will reach you as soon as the analysts send so there is no time lag between you reading it and working on the call. The fee ranges from Rs.8 000 per month to Rs.48 000 yearly. I find that these services were being offered by the Noticees in lieu of the consideration which could be paid by the investor concerned directly to the bank accounts opened in the name of M s. Cash Cow Broking & Advisory Solutions with ICICI Bank Axis Bank and Central Bank of Indiathe details of which were mentioned on their website and alternatively through PayU money which was linked to their Axis Bank and Central Bank of India accounts. From the details of the said bank accounts I note that in aggregate a total of Rs. 1 03 74 093 has been credited during the period October 2015 to October 2017. From the aforesaid facts I find that Cash Cow was engaged in giving advice relating to investing in purchasing selling or otherwise dealing in securities or investment products through its website www.cashcowresearch.com. I note that Final Order in the matter of Cash Cow Broking & Advisory Solutions the Account Opening Form for the ICICI Bank Account copy of which was forwarded by the bank to SEBI that the type of industry of Cash Cow is Commodities broking and advisory and the partners are mentioned as Mr. Amit Jain and Mr. Shailendra Sen and Mr. Shailendra Sen and Mr. Shailendra Sen and Mr. Shailendra Sen and Mr. Chirag Sharma joined as partner on October 15 2014. The Noticees submitted that the objective of the partnership was to offer broking services internet sales and advisory services in the share market and they initiated advisory service in the month of August 2014 and collected revenue from advisory services from 22 clients. Thus I find that Cash Cow was the partnership concern of Mr. Shailendra Sen Mr. Amit Jain and Mr. Chirag Sharmaand were engaged in investment advisory activity. In view of this I find that Noticees were providing the investment advice in lieu of consideration. In terms of Regulation 2(1) of IA Regulations 2013 such an advice is “investment advice”. Therefore I find that Noticees were engaged in the business of providing investment advice to public for consideration and were thus acting as an investment adviser as defined under Regulation 2(1) of the IA Regulations 2013. In this regard the Noticees have submitted that services were being provided under genuine and a bona fide belief that the said business was well within the scope of work of an authorised person of a sub broker and that the Partners were not required to obtain any separate registration as an investment advisor and that they were not in violation of any SEBI Regulations. Further the Noticees have submitted that upon receiving SEBI letter on March 14 2016 seeking information about the alleged role as an investment advisor they ceased the operations of Final Order in the matter of Cash Cow Broking & Advisory Solutions Cash Cow with immediate effect. However that because of their earlier commitments they were compelled to service the existing clients upto February 2017 in order to achieve a proper closure to their operations mainly as regards their operations and also to minimize the losses of their then existing clients. 10. With regard to the aforesaid submissions of the Noticees I note that it is a well settled law that ignorance of law is no excuse. Hence the Noticees cannot take the plea that they had genuine and bona fide belief that the said business was well within the scope of work of an authorised person of a sub broker as the provisions of the SEBI Act 1992 and the IA Regulations 2013 are clear in this regard that a person must obtain a certificate of registration before acting as an investment advisor. I note that Section 12(1) of the SEBI Act 1992 provides as under: “No stock broker sub broker share transfer agent banker to an issue trustee of trust deed registrar to an issue merchant banker underwriter portfolio manager investment adviser and such other intermediary who may be associated with securities market shall buy sell or deal in securities except under and in accordance with the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act:” 11. In order to protect the interest of investors and to maintain integrity of the securities market IA Regulations 2013 provides safeguards to ensure that the investors who receive investment advice are protected. One such safeguard is that any person carrying out investment advisory activities has to obtain registration from SEBI as required under Regulation 3(1) of the IA Regulations 2013. Regulation 3(1) provides that “On and from the commencement of these regulations no person shall act as an investment adviser or hold itself out as an investment adviser unless he has obtained a certificate of registration from the Board under these regulations” and conduct its activities in accordance with the provisions of IA Regulations. Further I note that for seeking a certificate of registration for acting as an investment adviser an entity is required to satisfy inter alia the following requirements as provided under IA Regulations 2013: i) An application for seeking certificate of registration to be made to Local Office Regional Office or Head Office of SEBI as the case may be in Form A as Final Order in the matter of Cash Cow Broking & Advisory Solutions specified in the First Schedule to IA Regulations 2013 along with requisite non ii) The applicant in case of an individual investment adviser or its principal officer in case of a non individual investment adviser shall be appropriately qualified refundable application fee and certified as under: a. A professional qualification or post graduate degree or post graduate diploma in finance accountancy business management commerce economics capital market banking insurance or actuarial science from a university or an institution recognized by the Central Government or any State Government or a foreign university or institution or association or a professional qualification by completing a Post Graduate Program in the Securities Market from NISM of a duration not less than one year or a professional qualification by obtaining a CFA Charter from the CFA Institute b. An experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management c. Applicant in case of individual investment adviser or its principal officer in case of a non individual investment adviser and persons associated with investment advice shall have at all times a certification on financial planning or fund or asset or portfolio management or investment advisory services from NISM or any other organization or institution including Financial Planning Standards Board of India or any recognized stock exchange in India provided such certification is accredited by NISM. iii) Individual applicant must have net worth of not less than 5 lakh rupees and non individual applicant must have net worth of not less than 50 lakh rupees. Final Order in the matter of Cash Cow Broking & Advisory Solutions 12. Therefore I note that safeguards provided under IA Regulations 2013 requires continued minimum professional qualification and net worth requirement for investment adviser including disclosure of all conflict of interest prohibition on entering into transactions which are contrary to advice given for 15 days risk profiling of investors maintaining documented process for selecting investment for client based on client’s objective and risk profile understanding the nature and risks of products or assets selected for clients etc. Hence the contention of the Noticees that they acted in genuine and bona fide belief is untenable. 13. Further with regard to the submission of the Noticees that they ceased the operations of Cash Cow with immediate effect in March 2016 but because of their earlier commitments they were compelled to service the existing clients upto February 2017 I note that Cash Cow had submitted in March 2016 to SEBI that it would stop rendering such services and make changes to its website. However I note that subsequent to making submissions to SEBI in March 2016 that they will close their business Cash Cow had mobilized Rs. 38 64 457 during the period April 2016 to February 2017. Hence I note that the Noticees have continued to act as investment advisors even after submitting to SEBI that it would stop its unregistered investment advisory services. Further the submission of the Noticees that they were compelled to service their existing clients due to earlier commitments is absolutely unacceptable and is an admission of their continuing violation of the aforesaid provisions of the SEBI Act and IA Regulations in acting as unregistered investment advisors. Hence the aforesaid submissions of the Noticees are untenable. 14. The Noticees have also submitted that Noticee no. 2 had cleared investment advisor examination conducted by National Institute of Securities Market and applied before SEBI for grant of certificate of registration as an investment advisor under the proprietorship concern named ‘Capital Heed Financial Research’ and registration was granted by SEBI w.e.f. December 29 2017 and hence any violation that they may have committed in good faith during the period between August 2014 to February 2017 may be pardoned. In this regard I note that proceedings were initiated by SEBI against Capital Heed Financial Research and its proprietor Mr. Shailendra Senand vide SEBI Order dated June Final Order in the matter of Cash Cow Broking & Advisory Solutions 01 2021 it was held that: “31. To sum up I find that Mr. Shailendra Sen when seeking registration from SEBI 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 unauthorized investor advisory activities undertaken by his partnership firm in true and correct sense to SEBI. However it is now clear that he has knowingly made a false declaration in his application form for registration as investment adviser stating that he was not engaged in investment advisory services prior to filing his application thereby has intentionally furnished a false misleading wrong information to SEBI in violation of Clauses 1 and 8 of the Code of Conduct for investment adviser read with regulation 15(9) of the IA Regulations. Moreover the Noticee has also failed to disclose the fact of his earlier engagement in the activities of Cash Cow in the capacity of a partner of the said firm even after the certificate of registration for Capital Heed was granted to him and such failure on the part of the Noticee to disclose such information which was not disclosed at the time of obtaining the registration has led to violation of regulation 13(b) of the IA Regulations. The aforesaid misconduct on the part of the Noticee has also amounted to violation of regulation 13(a) of the IA Regulations. At the same time the Noticee has misrepresented to investors that it can provide PMS although it did not hold a certificate of registration from SEBI to do so thereby violating regulation 3 of PMS Regulations 1993.” 15. From the above order I note that Noticee no. 2 had made false declaration in his application form for registration as investment adviser under the proprietorship concern named ‘Capital Heed Financial Research’ before SEBI stating that he was not engaged in investment advisory services prior to filing his application and thereby had intentionally furnished a false misleading wrong information to SEBI. Further Noticee no. 2 had failed to disclose that it had engaged in investment advisory services as a partner of Cash Cow even after the certificate of registration for Capital Heed Financial Research was granted to him. I note that Noticee no. 2 had tried to conceal its unregistered activities from SEBI and this shows that the conduct of the Noticee no. 2 has been dubious and not genuine. Therefore grant of registration by SEBI to Noticee no. 2 on the basis of misrepresentation cannot be taken by Noticee no. 2 as mitigating factor to condone his unregistered investment advisory activities carried along with other Noticees herein. In view of such conduct the contention of the Noticees that Noticee no. 2 had later obtained SEBI registration under the proprietorship concern named ‘Capital Heed Financial Research’ and any violation that they may have committed in good faith during the Final Order in the matter of Cash Cow Broking & Advisory Solutions period between August 2014 to February 2017 may be pardoned is deplorable and therefore untenable. 16. The activities of the Noticees as brought out from the various materials described above seen in the backdrop of the aforesaid provisions show that the Noticees were holding themselves out and acting as an investment adviser consideration. However it is noted that the Cash Cow was not registered with SEBI in the capacity of Investment Advisor. Hence I find that these activities representations as being made by the Noticees without holding the certificate of registration as investment adviser are in violation of Section 12(1) of SEBI Act 1992 read with Regulation 3(1) of the IA Regulations 2013. 17. I note that in terms of Section 4 of the Indian Partnership Act 1932 "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”. Further “Persons who have entered into partnership with one another are called individually "partners" and collectively a firm" and the name under which their business is carried on is called the "firm name". Thus the partnership firm is nothing but all the partners acting together. Therefore Noticees no. 1 to 4 are in violation of Section 12(1) of SEBI Act 1992 read with Regulation 3(1) of the IA Regulations 2013. 18. From the bank account statement of the Noticees opened in the name of Cash Cow with ICICI BankAxis Bankand Central Bank of India it is observed that the aforesaid bank accounts received in aggregate total credits of Rs. 1 03 74 093 during the period October 2015 to October 2017. I note that partnership firm i.e. Cash Cow in whose name all these bank accounts were opened had in the bank account opening forms indicated investment advisory service as its business activity. Therefore it is reasonable to draw an inference that amounts credited in these bank accounts were towards investment advisory services rendered by the Noticees. Further I note that the complainant Mr. Vikram Oswal has claimed that he had paid an amount of Rs. 10 000 to the Noticees for availing investment advisory services from the Noticees. Final Order in the matter of Cash Cow Broking & Advisory Solutions 19. In view of the foregoing I in exercise of the powers conferred upon me under Sections 11(1) 11(4) and 11B read with of Section 19 of the SEBI Act 1992 hereby direct that: The Noticees shall within a period of three months from the date of coming into force of this Order jointly and severally refund the money received from the clients investors complainant as fees or consideration or in any other form in respect of their unregistered investment advisory activities The Noticees shall issue public notice in all editions of two National Dailies one English and one Hindi) and in one local daily with wide circulation detailing the modalities for refund including the details of contact person such as names addresses and contact details within 15 days of coming into force of this Order The repayments to the clients investors shall be effected only through Bank Demand Draft or Pay Order or electronic fund transfer or through any other appropriate banking channels which ensures audit trails to identify the beneficiaries of repayments The Noticees are prevented from selling their assets properties and holding of mutual funds shares securities held by them in demat and physical form except for the sole purpose of making the refunds as directed above ICICI Bank Axis Bank and Central Bank of India wherein Cash Cow is holding accounts are directed not to allow any debits withdrawals from and credits to the aforesaid accounts except for debits for the purposes of the refunds as directed in para 19(i) above. ICICI Bank Axis Bank and Central Bank of India are directed to ensure that all the above directions are strictly enforced vi) After completing the aforesaid repayments the Noticees shall file a report of such completion with SEBI addressed to the Division Chief CIS Division Final Order in the matter of Cash Cow Broking & Advisory Solutions Investment Management Department SEBI Bhavan Plot No. C4 A G Block Bandra Kurla Complex Bandra Mumbai 400051 within a period of 15 days after completion of three months from the coming into force of this order duly certified by an independent Chartered Accountant. The restraint contained in para 19(iv) and shall cease to operate once the refund to the investors is complete and the report as contemplated herein is filed In case of failure of the Noticees to comply with the aforesaid directions in sub paraandabove SEBI on the expiry of the stipulated time period therein may recover the amounts mentioned in para 18 above or any other amount as may be found to have been raised by the Noticees from the Noticees in accordance with Section 28A of the SEBI Act 1992 including such other provisions contained in securities laws viii) The Noticee no. 2 is debarred from accessing the securities market directly or indirectly and is prohibited from buying selling or otherwise dealing in the securities market directly or indirectly in any manner whatsoever for a period of 2years from the date of this order or till the expiry of 2years from the date of completion of refunds to investors as directed in paragraph 19(i) above whichever is later. However in view of the SEBI Order June 01 2021 passed in the matter of M s Capital Heed Financial Research against Noticee no. 2 whereby debarment of 3 years have been imposed on Noticee no. 2 the debarment passed vide this direction against Noticee no. 2 shall run concurrently with the debarment passed in the said Order dated June 01 2021 The Noticees no. 1 3 and 4 are debarred from accessing the securities market directly or indirectly and are prohibited from buying selling or otherwise dealing in the securities market directly or indirectly in any manner whatsoever for a period of 1year from the date of this order or till the expiry of 1 year from the date of completion of refunds to investors as directed in paragraph 19(i) above whichever is later. Final Order in the matter of Cash Cow Broking & Advisory Solutions The Noticee no. 2 is also restrained from associating with any company whose securities are listed on a recognized stock exchange and any company which intends to raise money from the public or any intermediary registered with SEBI in any capacity for a period of 2years from the date of this order or till the expiry of 2 years from the date of completion of refunds to investors as directed in paragraph 19(i) above whichever is later The Noticees no. 1 3 and 4 are also restrained from associating with any company whose securities are listed on a recognized stock exchange and any company which intends to raise money from the public or any intermediary registered with SEBI in any capacity for a period of 1 year from the date of this order or till the expiry of 1year from the date of completion of refunds to investors as directed in paragraph 19(i) above whichever is later and xii) The Noticees shall not undertake either during or after the expiry of the period of debarment restraint as mentioned in paragraph 19(viii) to above either directly or indirectly investment advisory services or any activity in the securities market without obtaining a certificate of registration 20. The direction for refund as given in paragraph 19(i) above does not preclude the clients investors to pursue the other legal remedies available to them under any other law against the Noticees for refund of money or deficiency in service before any appropriate forum of competent jurisdiction. 21. The order shall come into force with immediately however in view of the exceptional circumstances emerged due to the outbreak of a COVID 19 and consequential restrictions imposed in different parts of the country the directions given in paragraph 19 except directions given in sub paras 19(viii) to shall come into force within 30 days from the date of this order. from SEBI as required under the securities laws. Final Order in the matter of Cash Cow Broking & Advisory Solutions 22. A copy of this order shall be sent to the Noticees recognized Stock Exchanges the relevant banks Depositories and Registrar and Transfer Agents of Mutual Funds to ensure that the directions given above are strictly complied with. Place: Mumbai Date: January 18 2022 Sd ANANTA BARUA WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA 