SEBI Crackdown On Entities Engaged in Unregistered Investment Advisory And Portfolio Management Activities through Short Message Services (SMSs)

SEBI had noticed that certain entities were  offering intraday tips and stock advisory services to investors through Short Message Services (SMSs) via mobile phones.  SEBI , as part of its investigation, obtained details of the call data records of the telephone numbers used for sending such SMSs. Thereafter, SEBI conducted a surprise visit on the premises of one Mr. Imtiyaz Hanif Khanda and one Mr. Vali Mamad Habib Ghaniwala. It was prima-facie observed that the said persons through their proprietary concerns viz. M/s Right Trade,M/s Sai Traders, M/s Bull Trader and M/s Laxmi Traders were providing investment advice without being registered with SEBI. Further, M/s Right Trade had solicited business of portfolio management services from the general public  without being registered as a portfolio manager with SEBI.  The entities had also made misrepresentations by making unrealistic claims, false statements such as having office in various countries, FII based calls, jackpot calls, etc., and they also made representation in reckless and careless manner in their messages and website suggesting facts which are not true. By their acts and omissions they have prima-facie solicited, enticed and induced investors to deal in securities on the basis of their investment advices, stock trade tips, etc

In view of the above, The Whole Time Member, Shri Rajeev Kumar Agarwal passed an ad-interim ex-parte order dated August 20, 2013 debarring Mr. Imtiyaz Hanif Khanda and  Mr. Vali Mamad Habib Ghaniwala from buying, selling or dealing in the securities market, either directly or indirectly, in any manner whatsoever  till further orders. Further, the above entities including their proprietary concerns were directed to

(a) to cease and desist from acting as an investment advisors and portfolio managers and not to solicit or undertake such activities or any other unregistered activity in the securities market, directly or indirectly, in any manner whatsoever;

(b) immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, websites, etc. in relation to their investment advisory and portfolio management activities or any unregistered activity in the securities market.

Click Here for the full text of the order.