The order came after Sebi conducted an examination into the business of MI Research with respect to compliance of the entity with IA (Investment Advisers) regulations.
The period of examination was November 2017 to August 2019.
In its order on Monday, Sebi found that MI Research had collected up to Rs 1.95 crore from 748 clients by charging them for services provided as an investment adviser. The quantum of fees charged for its services appears to be unreasonably high.
However, the noticee (MI Research) had failed to comply with the basic requirements of IA rules and also promised assured returns and mis-sold his services to clients and thus, failed to act honestly and in good faith with due skill, care and diligence, and adhered to a high professional standard, appropriate standards of conduct and compliance with regulatory requirements.
“Therefore, I find that the noticee had acted with blatant disregard for the interest of its clients and exposed its uninformed clients to the risk of financial peril while simultaneously charging exorbitant fees from them.
“Thus, in light of such grave violations committed by the noticee, I am of the view that the amount of money collected as fees by MI Research from its clients was tantamount to disproportionate gain or unfair advantage obtained by the noticee,” Sebi’s Adjudicating Officer Soma Majumder said in the order. As a Sebi-registered investment adviser, MI Research was under a statutory obligation to abide by the provisions of IA norms and act honestly and fairly in the best interests of its clients, which it had deliberately failed to do so, the order added.
In three separate orders on Monday, the regulator slapped a fine of Rs 5 lakh each on Vineeta Rani, Vipul Kothari and Kanchan Agarwal for indulging in non-genuine trades in the illiquid stock options segment on the BSE.
The order came after Sebi had observed large-scale reversal trades in the illiquid stock options segment on the BSE, leading to artificial volumes on the exchange.
Further, the regulator conducted an investigation into the trading activities of certain entities engaged in the segment from April 2014 to September 2015.
In another order, Sebi levied a fine of Rs 6 lakh on an entity for not complying with disclosure norms in the matter of Selene Estate Ltd.
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