Securities and Exchange Board of India (SEBI): S.K. Mohanty, Whole Time Member while exercising the powers under Sections 11, 11(4),11B (1) and 11D, read with of Section 19 of the SEBI Act, 1992 and regulation 11 of the PFUTP Regulations, 2003, while disposing of the allegations levelled in the interim order held, the Noticees shall within a period of three months, refund the money received from the clients/investors/complainant, as fees or consideration or in any other form, in respect of their unregistered investment advisory activities and portfolio management services, with certain other restrictions and compliances.
In the instant case, it was alleged that the Noticees were collecting funds from the investors for the purpose of investment in the securities market while carrying out PMS activities without obtaining registration from SEBI as required under regulation 3 of PMS Regulations, 1993. Also, that they had potrayed themselves as M/s. Global Portfolio Management, as a pioneering financial advisory firm having a team of specialised financial market analysts having massive experience in carrying out capital market research, with an intention to deceive the investors.
The Tribunal was of the opinion that, “as observed in the interim order, Noticees have not taken registration from SEBI under the PMS Regulations, 1993. Therefore, the activity of the Noticees, by virtue of offering PMS to the investors and general public, was in gross violation of Section 12(1) of SEBI Act, 1992 read with regulation 3 of the PMS Regulations, 1993”. And further that the deceptive and fraudulent nature of carrying out such illegal activities are well covered within the definition of “fraud” defined under regulation 2(1)(c) of the PFUTP Regulations, 2003. It further noted that “fraudulent activities/ conduct/ act/ practice of the Noticees, as discussed above, are also in violation of provisions of Section 12A (c) of SEBI Act, 1992 and regulations 3(d) and regulations 4(1) of PFUTP Regulations, 2003”.[Global Portfolio Management, In re, 2021 SCC OnLine SEBI 196, decided on 03-08-2021]
Agatha Shukla, Editorial Assistant has reported this brief.