SEBI Imposes Two-Year Market Ban on Nine Entities for Unregistered Investment Advisory

The Securities and Exchange Board of India (SEBI) has recently enforced a stringent action by prohibiting nine entities from participating in the securities market for a duration of two years. This decisive move comes in the wake of these entities' failure to adhere to the regulatory norms set for investment advisors.

Entities Facing the Ban

Those facing the ban include individuals Yogesh Kukadia, Rajesh R Kallidumbil, and Nithin Raj, as well as firms Signal2Noise Capital Partners, Investo Investment Advisers, SS Info Sales, SI Digi Sales, CT Web Sales, and ML Tele Sales. The restrictions extend to prohibiting them from buying, selling, or dealing in the securities market, both directly and indirectly.

The Investigation and Findings

The crackdown emerged after a detailed investigation by SEBI, revealing that the entities in question had collectively amassed approximately Rs 8 crore from investors. This was done through the operation of unregistered investment advisory services. Moreover, SEBI uncovered that the three individuals, who were linked to all six partnership firms, had sidestepped regulations by running the advisory services without proper registration and were not authorized to charge fees for such services.

Consequences and Orders

Alongside the market exclusion, these entities have been directed to reimburse the collected sum to their clients within a three-month timeframe. Additionally, they have been slammed with a financial penalty amounting to Rs 18 lakh, which they are required to settle within 45 days. Heightening the penalties, the three individuals involved have also been barred from holding directorial positions or any key managerial roles in listed public companies for the same two-year period.

SEBI's Stance on Regulatory Compliance

SEBI's stringent measures underscore its commitment to maintaining order and safeguarding investor interests in the financial market. By enforcing these bans, the regulator sends a clear warning to investment advisory services about the imperative nature of operating within the regulatory framework and the consequences of flouting these rules.

SEBI, Ban, Investment