Mumbai: In a tight slap to an unregistered entity offering illegal investment advisory services, the capital markets regulator Securities and Exchange Board of India (SEBI) has dismissed the “cock and bull story” of the investment advisory and imposed penalties for alleged regulatory violations and misleading investors with false promises of returns.

The market watchdog has come down heavily on regulatory violations in recent months making critical observation on errant investment firms. 

SEBI Imposes Fine On Shree Sai Proficient Financial Services

The regulator imposed a fine of Rs 19 lakhs on Shree Sai Proficient Financial Services (SSPFS) dismissed the investment advisory firm's defence as a “cock and bull story” and an “afterthought” designed to absolve itself of wrongdoing. 

SEBI Imposes Fines On Premier Polyfilm

Earlier in the month SEBI had imposed fines on Premier Polyfilm for related-party transactions (RPT) stating ignorance of law cannot be an excuse for not taking approvals from its audit committee and share holders. The market regulator had remarked it is a cardinal principle of law that, ‘Ignorantia juris non excusat' and being a listed company for two decades cannot plead ignorance of law. 

Allegations Made By SEBI Against Sai Proficient

In the present case SEBI has alleged Sai Proficient failed to cooperate with the investigation and also colluded with an unregistered entity to defraud the public. The market regulator probe SSPFS was used as a front by Sai Proficient Research to collect investor funds. The investigation uncovered financial trail of over Rs 4 crore in transactions traced across accounts linked to the two entities, revealing coordinated efforts to lure investors.

The regulator further stated that Sai Proficient had acted in “connivance with SSPFS, using it as a camouflage to lure people into its net” and despite repeated notices did not cooperate with the investigation further compounding its violations. 

The probe held the financial misleading promised returns of up to 95% a serious violations explicitly prohibited under SEBI regulations. The regulator found such assurances to misled unsuspecting investors, were deemed fraudulent and unfair trade practices, undermining investor trust in the securities market. 

The SEBI also highlighted that Sai Proficient failed to provide key documents during the investigation, including KYC records, risk profiling forms and client agreements.