Capital Grow, PNP Shareon and PNP Solutions fined and barred from the market by SEBI for making illegal investments advisory

Capital Grow, PNP Shareon and PNP Solutions fined and barred from the market by SEBI for making illegal investments advisory

The Securities Exchange Board of India (SEBI) imposed a penalty of Rs 6 lakh on Prashanth Gole, owner of Capital Grow Financial Services for failing to address complaints, deceiving consumers, and promising unrealistic profits. Furthermore, SEBI in its other order banned Prakash Halder and Pradeep Halder, the owners of PNP Shareon and PNP Solutions, for six after discovering that both had engaged in providing illegal market advisory.

In the present case, SEBI prima facie found that the Noticees including M/s. PNP Shareon Solutions, M/s.PNP Solutions, Mr. Pradeep Haldar and Mr. Pradeep Haldar and Mr. Prakash Haldar, the proprietors of M/s. PNP Shareon Solutions and M/s PNP Solutions were engaged in investment advisory services without obtaining a certificate registration from SEBI in violation of the provisions of Section 12(1) of Securities and Exchange Board of India Act, 1992 (SEBI Act, 1992) and Regulation 3(1) of SEBI (Investment Advisers) Regulations, 2013 (IA Regulations 2013).

SEBI received numerous complaints that the complainants were allegedly cheated by M/s. PNP Shareon Solutions. One of the complainants had deposited Rs. eleven thousand one hundred and one in the bank account of M/s. PNP Shareon Solutions for research call with a guarantee that in case of any loss, M/s. PNP Shareon Solutions would refund the amount within 21 days. However, there was a loss and subsequently, M/s. PNP Shareon Solutions blocked the number of the said complainant and did not refund the money to him.

In another complaint, it was alleged that M/s. PNP Solutions had approached the complainant to do trading for which M/s. PNP Solutions would teach the basics of trading to the said complainant. Thereafter, upon advice of M/s. PNP Solutions, the said complainant paid a total of Rs. one lakh eighty-five thousand to M/s. PNP Solutions in several tranches for investment. However, M/s. PNP Solutions failed to return the money to the said complainant.

The Board analyzed the manner comprehensively and noted that Noticees had made contradictory submissions in respect of the allegations. The Board found that the Noticees were engaged in giving advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, through their website, www.pnpshareonsolutions.com, in lieu of consideration / fees and the same comes under the definition of "Investment Adviser" as given in Regulation 2(1)(l) of IA Regulations, 2013, the Noticees were providing "investment advice" through their website and hence, the Board considered that the Noticees were acting as investment advisers as defined under Regulation 2(1)(m) of the IA Regulations, 2013.

The adjudicating officer Ananta Barua, whole-time member highlighted that is imperative that any person carrying out investment advisory activities has to necessarily obtain registration from SEBI and conduct its activities in accordance with the provisions of SEBI Act, 1992 and Regulations framed thereunder.

The Board observed, "it is relevant to note that in order to protect the interest of investors and to preserve the integrity of the securities market, IA Regulations, 2013 has been framed by SEBI which provide various safeguards to ensure that the interest of the investors who receive investment advice are protected. Further safeguards provided under IA Regulations, 2013 include continued minimum professional qualification and compliance with net-worth requirement for acting as an investment adviser, prior disclosure of all conflicts of interest, prohibition on entering into transactions which are contrary to advice given to the clients at least for 15 days from the date of giving advice to the clients, mandatory risk profiling of investors, maintaining documented process for selecting investment products for clients based on client's investment objective and risk profile and understanding of the nature and risks of products or assets selected for such client, etc."

In addition, the Board took note of the fact that Noticees had collected at least Rs. Sixty lakh forty-eight thousand and nine hundred and forty-two

In the backdrop of the aforesaid regulatory provisions the Board found that the Noticees were holding itself out and was acting as an IA, although the Noticees were not registered with SEBI in the capacity of IA. Hence, these activities/ representations as were being made by the Noticees without holding the mandatory certificate of registration as investment adviser, were in violation of Section 12(1) of SEBI Act, 1992 read with Regulation 3(1) of the IA Regulations, 2013.

The allegations against the firms were proven and Adjudicating Officer ordered them to return the money collected as fees to the concerned people.