SEBI has initiated strict action against M/s Apex Financial Services and Propriter Jyoti Kalra for inducing investors to invest in unregistered collective investment schemes (CIS).
MUMBAI (India CSR): The Securities and Exchange Board of India (SEBI) has passed an order against Apex Financial Services and its sole proprietor Jyoti Kalra for providing unauthorized investment advisory services to investors and violating the SEBI (Investment Advisers) Regulations, 2013.
What did Apex Financial Services do?
According to the SEBI order dated May 30, 2023, Apex Financial Services was engaged in providing investment advice to clients through its website, social media platforms, and mobile applications without obtaining registration from Securities and Exchange Board of India as required under the regulations. Apex Financial Services also used misleading and deceptive advertisements to lure investors and charged fees ranging from Rs. 5,000 to Rs. 1 lakh for their services.
SEBI found that M/s Apex Financial Services had collected money from investors through various channels, including bank accounts, cheques, and demand drafts. The company had promised investors high returns on their investments, but it failed to deliver on its promises.
Apex Financial Services also failed to comply with the provisions of the regulations regarding disclosure of risks, conflicts of interest, maintenance of records, redressal of grievances, and code of conduct. Apex Financial Services also did not cooperate with SEBI during the investigation and did not furnish the required information and documents.
What action did SEBI take?
In a landmark ruling, Apex Financial Services, headed by proprietor Jyoti Kalra, has been mandated to refund all proceeds accrued from clients, complainants, and investors related to unregistered investment advisory activities. This comprehensive coverage provides an overview of the key directives set forth in the order, which includes public notifications, approved channels for refunds, the necessity of a detailed report to Securities and Exchange Board of India, subsequent deposit of remaining balances, restrictions on asset transactions, and future stipulations for operating in the securities market.
Unregistered Investment Advisory Fees
Apex Financial Services, led by proprietor Jyoti Kalra, has been ordered to refund all amounts received from clients, complainants, and investors as fees or consideration for unregistered investment advisory activities, according to a recent order. The refunds must be completed within three months from the date of the order.
Public Notice Required in National Dailies
The order further stipulates that Apex Financial Services must issue a public notice detailing the modalities for the refund. The notice should appear in all editions of two national dailies (one in English and one in Hindi) and one local daily with wide circulation, within 15 days of the order taking effect.
Refunds to be Made Through Approved Banking Channels
Repayments to clients, complainants, and investors are to be made only through Bank Demand Draft, Pay Order, electronic fund transfer, or other approved banking channels that ensure audit trails to identify the beneficiaries of the repayments.
Certified Report to be Filed with SEBI
After completing the refunds, a certified report detailing the refunds must be filed with SEBI within a period of 15 days. The report should be certified by an independent Chartered Accountant and include details of the amount, mode of payment, names of the parties, and contact details.
Remaining Balance to be Deposited with SEBI
Any remaining balance will be deposited with SEBI and kept in an escrow account for one year, to be distributed to clients, complainants, and investors who were availing the investment advisory services from Apex Financial Services.
Restrictions on Asset Sales and Market Access
Apex Financial Services is restrained from selling any assets, properties, and holdings of mutual funds/shares/securities held in demat and physical form, except for the sole purpose of making refunds or depositing balance amounts with SEBI. They are also debarred from accessing the securities market, directly or indirectly, and are prohibited from buying, selling or dealing in the securities market for a specified period.
Registration Required for Future Activities
Finally, the Noticees are warned not to undertake investment advisory services or any activity in the securities market without obtaining a certificate of registration from SEBI, either during or after the period of debarment/restraint.
Read the order: SEBI | Order in the matter of M/s Apex Financial Services, Prop. Jyoti Kalra
Key takeaways
SEBI also found that M/s Apex Financial Services had not registered with SEBI as a CIS, which is mandatory under the SEBI Act.
The company had also not filed any periodic returns with SEBI, which is also mandatory.
