SAT Upholds the Debarring of an Unregistered Investment Advisor from Securities Market for Misleading Investors

Case Details: Restock Research v. Securities & Exchange Board of India - [2023] 157 taxmann.com 596 (SAT-Mumbai)

Judiciary and Counsel Details

• • Justice Tarun Agarwala, Presiding Officer & Ms Meera Swarup, Technical Member
  • CS Abhishek Mishra for the Appellant.
  • Ms Dhruti Kapadia, Manish Chhangani, Sumit Yadav, Abhay Chauhan & Atul Kumar Agrawal, Advs. for the Respondent.

Facts of the Case

In the instant case, the Appellant applied for registration as a research analyst. While the application was pending, the respondent/board found that he was carrying on unauthorized investment advisory activities through a website without obtaining a registration.

Consequently, a show cause notice was issued and the Chief General Manager (CGM) imposed penalties on the Appellant. The Appellant vide instant appeal contended that he had applied for registration under relevant regulations and did not know that he could not carry on activities until and unless he was registered.

Further, it was noted that the appellant had applied for registration as a Research Analyst on 26-08-2021 whereas appellant was carrying on investment advisory services from December 2020 onwards and had also collected a sum of Rs. 10.72 lakhs from his clients.

Also, the website through which the appellant was carrying out investment advisory services, indicated that the appellant was registered with SEBI which was totally false and gave a wrong picture to investors.

SAT Held

Subsequently, the SAT held that the direction to refund the amount and restraining the appellant from accessing the securities market and imposition of penalty did not suffer from any error of law and the instant appeal of the appellant was to be dismissed.