SEBI Bars Proprietor Of GN Traders for Illegal Investment Advisory Services
Rajesh Kumar
30 Jun 2024 6:45 AM GMT
The Securities and Exchange Board of India (SEBI) has imposed issued an order against Kashif Siddique, the proprietor of GN Traders, for his involvement in illegal investment advisory services. SEBI has barred Siddique from operating in the securities market for two years and imposed a fine of Rs 11 lakh. Additionally, he has been directed to refund Rs 1.40 crore, which he collected as fees from his clients.
SEBI's order stated that he received amounts as investment advisory fees across various bank accounts, totaling Rs 1.40 crore. These funds, collected from unsuspecting investors, were obtained through fraudulent activities, including promises of guaranteed returns.
An investor's complaint approached the SEBI. The complainant alleged that Siddique collected Rs 20,000 under the pretense of offering account handling services and promising weekly returns through trading. GN Traders falsely assured returns of Rs 5 lakh from share market trading. SEBI's order stated that Siddique misrepresented his services and promised guaranteed returns.
SEBI held that by assuring guaranteed returns, he misled investors and engaged in fraudulent activities defined under Regulation 2(1)(c) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations.
This regulation states acts, practices, and courses of business that operate as fraud. Consequently, Siddique was restrained from selling assets, properties, mutual funds, shares, and securities, except for the sole purpose of making refunds to the affected clients.
Further, SEBI noted that Siddique violated Section 12(1) of the SEBI Act and Regulation 3(1) of the Investment Advisers (IA) Regulations. According to these regulations, no person can act as an investment adviser or hold themselves out as one without obtaining a certificate of registration from SEBI. The evidence presented during the investigation stated that Siddique was engaged in providing investment advice for consideration.
WhatsApp chats and bank records revealed that Siddique's representative, Nikhil Kumar, shared details of various investment plans, fees, and profit details with the complainant. The complainant paid Rs 20,000 to GN Traders' bank account for these services.
SEBI's IA Regulations mandate that anyone providing investment advisory services must obtain registration and meet certain qualifications. These include professional qualifications, certifications, relevant experience, and a minimum net worth requirement.
The investigation stated that Siddique had collected substantial fees without obtaining the necessary SEBI registration.
SEBI has directed Siddique to refund all monies collected from investors within three months. He must also issue public notices in national and local newspapers, providing details for refunds and contact information for investors.
