Final Order in the matter of Cash Cow Broking and Advisory Solutions

Final Order in the matter of Cash Cow Broking & Advisory Solutions

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WTM/AB/WRO/WRO/14741/2021-22

SECURITIES AND EXCHANGE BOARD OF INDIA

FINAL ORDER

UNDER SECTIONS 11, 11(4), and 11B OF THE SECURITIES AND EXCHANGE

BOARD OF INDIA ACT, 1992.

In respect of:

Noticee

No.

Name of the entity PAN No.

1. M/s. Cash Cow Broking & Advisory Solutions AAIFC2855R

2. Mr. Shailendra Sen (Partner) BUXPS9559Q

3. Mr. Amit Jain (Partner) AGSPJ3021G

4. Mr. Chirag Sharma (Partner) ASWPS7685C

In the matter of Cash Cow Broking & Advisory Solutions

(Aforesaid entities are hereinafter individually referred to as by their respective name or noticee number

and collectively as “the Noticees”.)

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) had

received complaints against M/s. Cash Cow Broking & Advisory Solutions,

(hereinafter referred to as “Cash Cow”), wherein it was prima facie alleged that

that Cash Cow was engaged in ‘investment advisory services’ without having the

requisite registration as mandated under the Securities and Exchange Board of

India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”) and SEBI (Investment

Advisers) Regulations, 2013 (hereinafter referred to as “IA Regulations, 2013”).

Cash Cow is a partnership firm whose partners are Mr. Shailendra Sen (Noticee

no. 2), Mr. Amit Jain (Noticee no. 3) and Mr. Chirag Sharma (Noticee no. 4).

2. Based on the same, an examination of the complaints was carried out by SEBI, as

follows:

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a) The website www.cashcowresearch.com of the Noticees was browsed for

information, but the same was not active at that time. The archive pages of the

website was downloaded from www.archive.org to gather information. From

the pages downloaded, it was observed that the Noticees had disclosed the

following in its website:

(i) Cash Cow is a leading financial services company in area of broking

and advisory industries in India. We at Cash Cow provide broking

platform for online/offline trading @ very low brokerage of 0.015 paisa.

In broking, we have registered in all exchanges NSE, BSE, MCX,

NCDEX, MCX-SX. In advisory about stocks, commodity, currency, agri,

etc., research is based upon fundamental & technical analysis of all

counters, scripts, & indexes.

(ii) We offer Advisory Services, Broking Services, Portfolio Services, and

Fund Management.

(iii) Portfolio Services: In this service, we provide you an efficient return on

your investment with transparency.

(iv) Advisory Services: In this service we provide you recommendation in all

segments such as Stock cash, Stock future Tips, BTST Tips, Forex, etc.

(v) Various packages were being offered for subscription at specified rates

and for specific products. One such illustration is given below:

Stock Future Tips– This service is for the traders who trade in Stock

Future. These Stock Future Tips are the after effect of center

exploration and investigation and help you to get a huge profit. Our call

via SMS will reach you as soon as the analysts send so there is no time

lag between you reading it and working on the call.

The fee ranges from Rs.8,000/- per month to Rs.48,000/- yearly.

(vi) The payment to subscribe to the services can be made directly to the

bank accounts opened in the name of Cash Cow with ICICI Bank, Axis

Bank and Central Bank of India, the details of which were mentioned on

their website. Alternatively, payments can be made through PayU

Money.

(vii) A search was also made on the internet to gather any other

information about Cash Cow. It was observed that there were

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complaints on www.consumercomplaints.in, wherein the complainants

have alleged that Cash Cow had promised that they will get good

returns from the market.

b) The Account Opening Forms (AOF), KYC documents and transaction /

account statements of bank accounts of Cash Cow obtained from ICICI

Bank, Axis Bank and Central Bank of India were examined and the following

observations were made:

1) ICICI Bank (A/c No. 657305500056 and 004105014315) –

(i) A/c No. 657305500056 was opened in March, 2013 in the name of

partnership firm, Cash Cow, having its address at G2, Suryansh

Exotika, Block E, 94 Alok Nagar, Kanadiya Road, Indore.

(ii) The email id is cashcowbroking@gmail.com and PAN: AAIFC2855R.

(iii) The partners are Mr. Amit Jain and Mr. Shailendra Sen.

(iv) The industry is mentioned as Commodities Broking and Advisory.

(v) The A/c no. 657305500056 did not have many transactions, and

received Rs.15,000/- during June 2014 to August, 2014.

(vi) With respect to A/c no. 004105014315, the entity had received

credits aggregating to Rs. 10,81,521/- during June, 2015 to February,

2017.

(vii) Balance amount available in the a/c as on February 24, 2017 is

Rs.77,037/-.

(viii) Analysis of bank account revealed that there were 126 credit

transactions which were in round figure ranging from Rs.1,000/- to

Rs.1,00,051/- aggregating to Rs.10,81,521/-. The credits were mainly

in the form of cash deposits and mobile money transfers.

2) Axis Bank (A/c No. 915020002699502) –

(i) A/c No. 915020002699502 was opened in January, 2015 in the name

of partnership firm, Cash Cow, having its address at G2, Suryansh

Exotika, Block E, 94 Alok Nagar, Kanadiya Road, Indore.

(ii) The email id is shailendra.sen@cashcowresearch.com and PAN:

AAIFC2855R.

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(iii) The partners are Mr. Shailendra Sen and Mr. Chirag Sharma.

(iv) As per the AOF, the type of business activity is advisory service.

(v) The entity has received credits aggregating to Rs. 24,80,873/- during

the period January, 2015 and February, 2017. Out of the said amount

of Rs. 24,80,873/-, credited into Axis Bank account from PayU Money

amounted to Rs. 10,34,361/-.

(vi) Credits from PayU Money were observed during the period December,

2016 and February, 2017. The credit amounts received through PayU

Money appear to be fees paid by clients for the purpose of investment

advisory services.

(vii) Balance amount available in the account as on February 27, 2017 is

Rs.1,80,143/-.

(viii) Analysis of bank account revealed that there were 95 credit

transactions which were in round figure ranging from Rs. 500/- to Rs.

1,00,000/- aggregating to Rs.14,46,512/- (excluding payment

gateways). These amounts appeared to have been collected as an

advisory fee.

3) Central Bank of India (A/c No. 3213140286) –

(i) The entity has received credits aggregating to Rs. 29,89,169/- during

the period August, 2014 and December, 2016. Out of Rs. 29,89,169/-,

credits from PayU Money amounted to Rs. 27,88,169/-.

(ii) Credits from PayU Money were observed to be during the period

August, 2014 and December, 2016. The credit amounts received

through PayU Money appear to be fees paid by clients for the purpose

of investment advisory services.

(iii) Balance amount available in the Account as on January 28, 2019 is

Rs. 1,689/-.

(iv) The bank was unable to provide a copy of the AoF of the entity since

the records were not traceable due to the branch office being flooded

with water in 2013 and majority of records were damaged, but has

informed that as per the date available in their software, the account

was opened by Partners, Mr. Shailendra Sen and Mr. Amit Jain.

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4) A tabular depiction of money credited into the various bank accounts

held by cash cow is as under:

Sl.

No.

Bank Account No Transaction

Period

Aggregate Value of

Credit Transactions

(in Rs.)

1. ICICI Bank A/c No.

004105014315

October 2015 to

July 2017 10,81,521

2. Axis Bank A/c No.

915020050222831

October 2015 to

Oct 2017 24,80,873

3. Central Bank A/c No.

3213140286

August 2014 to

December 2016 29,89,169

4. Credits through PayU Money 38,22,530

c) Further, complaints filed against Cash Cow were examined and the details of

the same are as under:

(i) Mr. Vikram Oswal has, inter-alia, alleged that he paid Rs. 10,000/- on

January 7, 2017 for profit commitment base plan (PCB) in which Cash Cow

has committed to give minimum profit of Rs. 80,000/- in 30 days. From the

email dated January 7, 2017 sent by Cash Cow to the complainant, it is

seen that Cash Cow was providing investment advisory activity without

obtaining a certificate of registration as an investment adviser from SEBI.

The relevant extract of the said e-mail is reproduced below.

Subscription details

Payment Mode: Payment Gateway

Amount: 10000

Payment Date: 2017-01-07

Invoice No: INV431

Service details

Services Pack: PCB Pack

Start date: 2017-01-09

Expiry date: 2017-02-12

Cash Cow strictly follow Trading principles and Stop Loss policy wherein

Customer by default agree to not do/enter any trade without defined Stop

Loss.

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(ii) Mr. Devesh has alleged that he has been receiving SMSs from Cash Cow

asking him to subscribe to their services. Mr. Devesh has submitted copy

of SMSs received in March, 2015, extract of which is given below:

Stock future Pack:

SEL IDFC MAR FUTURE

TGTS 170.50, 169.50

Cash cow research

Stock Future Pack:

Ist TARGET ACHIEVED IN IDFC MAR FUTURE SELL

HOPE YOU BOOKED PROFIT

Stock Future Pack:

Kindly exit from ONGC MAR FUT BUY CALL

d) SEBI sent a letter dated March 14, 2016 to the entity’s address in Orbit Mall,

Vijay Nagar, Indore, seeking information about unregistered investment

advisory activities. Mr. Shailendra Sen (Noticee no. 2), on behalf of Cash Cow,

vide its letter dated March 23, 2016 had, inter-alia, submitted the following:

(i) They had incorporated the partnership firm on September 05, 2012 with 2

partners, Mr. Amit Jain (Noticee no. 3) and Mr. Shailendra Sen (Noticee

no. 2). Mr. Chirag Sharma (Noticee no. 4) joined as a partner on October

15, 2014. The objective of the partnership was to offer broking services,

internet sales and advisory services.

(ii) They initiated only broking and internet sales in the years 2012-14. They

initiated advisory services in the month of August, 2014 and the revenue

from advisory services is only Rs.1,90,800/- collected from 22 clients.

(iii) The office was shifted from Alok Nagar to Orbit mall in January, 2015.

(iv) That they were of an understanding that since they are registered as a

sub broker and as mentioned in regulation 4 (g) of SEBI IA Regulations,

2013 granting exemption to sub broker exempts them from the

requirement of getting registered. However, post receiving SEBI letter,

they now know that they are required to get registered as an Investment

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Advisor besides being an Authorized Person. They have stopped offering

advisory services with immediate effect and shall offer such advisory only

once they are registered, for which they shall make an application in the

required format as soon as possible. Further, that requisite changes have

been made in the website to ensure that no advisory sales are conducted

from their website.

e) However, an examination of the bank accounts revealed that Cash Cow had

received payments towards advisory business subsequent to its submission to

SEBI in March, 2016. It was observed that Cash Cow had received payments

amounting to Rs.23,48,652 through Pay U Money gateway during the period

April, 2016 to February, 2017. Further, Cash Cow had also received cash

deposits and credits amounting to Rs.15,15,805/- during the period April, 2016

to February, 2017 in their Bank accounts, subsequent to their submission to

SEBI that they would stop their advisory business.

f) Accordingly, it was prima face observed that:

a. Cash Cow and its partners were carrying out unregistered investment

advisory activity without obtaining registration from SEBI and through their

website mobilized a sum of Rs. 65.51 lakhs during the period August,

2014 to October, 2017. Cash Cow vide its letter dated March 23, 2016 to

SEBI had also accepted that it was providing advisory services from

August, 2014 and was not aware that SEBI registration was necessary.

Further, Cash Cow also submitted that it would stop rendering such

services and make changes to its website.

b. Subsequent to submissions to SEBI in March, 2016 that they will close

their business, Cash Cow has mobilized Rs. 38,64,457/- during the period

April, 2016 to October, 2017.

c. Cash Cow Broking is also registered as Authorized Person with Angel

Broking Ltd and Angel Commodities Broking Pvt. Ltd.

3. In view of the above, a show cause notice was issued to the Noticees on March

12, 2020 (hereinafter referred to as “SCN”), alleging that the Noticees have carried

out investment advisory activities without obtaining a certificate of registration from

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SEBI. Accordingly, it was alleged that the Noticees have violated Section 12(1) of

SEBI Act, 1992 read with Regulation 3(1) of the IA Regulations, 2013. The SCN

called upon the Noticees to show cause as to why suitable directions including

debarment from securities market, refund of fees collected, non-association with

listed entities, intermediaries, etc., should not be passed under sections 11(1),

11(4) and 11B of the SEBI Act, 1992 for violation of section 12(1) of the SEBI Act,

1992 read with regulation 3(1) of the IA Regulations, 2013.

4. The Noticees were provided with the opportunity to file their objections/reply, if

any, within 21 days from the receipt of SCN and were also provided with an

opportunity of personal hearing before SEBI. The Noticees filed their reply to the

SCN vide letter dated April 06, 2020. The matter was then placed before me on

August 05, 2021 and following the principles of natural justice, an opportunity of

personal hearing was granted to the Noticees on September 23, 2021. On

September 23, 2021, Noticee no. 2 appeared on behalf of all the Noticees and

made submissions. The Noticee no. 2 also sought time to file written submissions

and accordingly, ten days’ time was granted to the Noticees to file their written

submissions. Thereafter, the Noticee no. 2 filed written submissions on October

05, 2021.

5. The Noticees vide letters dated April 06, 2020 and October 05, 2021 have made

the following submissions:

a. By way of a partnership deed dated September 05, 2012 a partnership firm in

the name and style of Cash Cow Broking & Advisory came to be constituted

which initially comprised of two partners namely Shri Amit Jain and myself and

thereafter on October 15, 2014, a third partner Shri Chirag Sharma joined

Cash Cow.

b. The firm/partners were carrying on activities as an Authorised Person and not

as an Investment Advisor.

c. That on March 14, 2016, when SEBI wrote a letter to Cash Cow firm seeking

information about the alleged role as an Investment Advisor, they had ceased

the operations of Cash Cow with immediate effect. However, because of our

earlier commitments, they were compelled to service the existing clients upto

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February 2017 in order to achieve a proper closure to the operations mainly

as regards our operations and also to minimize the losses of then existing

clients. However, it may be noted the partnership firm stood dissolved w.e.f.

March 29, 2017 and no new clients were on board from April 2016 pursuant to

the SEBI notice.

d. Further, without prejudice to what has been said herein and assuming for the

sake of argument and without admitting that Cash Cow/or myself in my

personal capacity were engaged in services as an Investment Advisor, I

submit that the services were being provided under genuine and a bona-fide

belief that the said business was well within the scope of work of an

authorised person of a sub-broker and that the Partners was not required to

obtain any separate registration as an investment advisor and that they were

not in violation of any SEBI Regulations.

e. Further, I wish to point out that I have cleared my investment advisor

examination conducted by National Institute of Securities Market and on

September 11, 2017, I applied before SEBI for grant of certificate of

registration as an investment advisor under the proprietorship concern named

Capital Heed Financial Research and the registration was duly granted w.e.f.

December 29, 2017 and hence without prejudice to what has been said herein

and assuming for the sake of argument and without admitting that Cash

Cow/or myself in my personal capacity were engaged as an investment

advisor, I say that any alleged violation that I may have committed in good

faith during the period between August 2014 to Feb 2017 may be pardoned.

f. I had already suffered a lot of losses due to Covid-19 and interim order

received from SEBI in Nov 18, 2019 for not doing any new or existing sales in

my SEBI registered firm Capital Heed Financial Research, and I did 100%

compliance as said by SEBI. In the final order in the matter of Capital Heed

Financial Research, I am already banned for three years from securities

market. Mr. Chirag Sharma and Mr. Amit Jain left fully of the working of

investment advisory and broking since end of February 2017. And even

before they were not actively participate in the working of cash cow.

6. I note that the definition of investment adviser, as given in Regulation 2(1)(m) of IA

Regulations, 2013, provides that investment adviser means “any person, who for

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consideration, is engaged in the business of providing investment advice to clients

or other persons or group of persons and includes any person who holds out

himself as an investment adviser, by whatever name called”. Regulation 2(1) (l) of

the IA Regulations defines investment advice as “advice relating to investing in,

purchasing, selling or otherwise dealing in securities or investment products, and

advice on investment portfolio containing securities or investment products,

whether written, oral or through any other means of communication for the benefit

of the client and shall include financial planning.”

7. I note that the Noticees had a website www.cashcowresearch.com and the

Noticees had inter alia claimed on its website that it is providing investment

advisory services and that they offer recommendation in all segments such as

stock cash, stock future tips, BTST tips, forex etc. As per the website, they offered

various packages for subscription at specified rates and for specific products. One

such illustration is given below:

Stock Future Tips– This service is for the traders who trade in Stock

Future. These Stock Future Tips are the after effect of center exploration

and investigation and help you to get a huge profit. Our call via SMS will

reach you as soon as the analysts send so there is no time lag between

you reading it and working on the call.

The fee ranges from Rs.8,000/- per month to Rs.48,000/- yearly.

8. I find that these services were being offered by the Noticees in lieu of the

consideration which could be paid by the investor concerned directly to the bank

accounts opened in the name of M/s. Cash Cow Broking & Advisory Solutions with

ICICI Bank (A/c No. 657305500056 and 004105014315), Axis Bank (A/c No.

915020002699502) and Central Bank of India (A/c No. 3213140286), the details of

which were mentioned on their website and alternatively through PayU money

which was linked to their Axis Bank and Central Bank of India accounts. From the

details of the said bank accounts, I note that in aggregate, a total of Rs.

1,03,74,093/- has been credited during the period October 2015 to October 2017.

From the aforesaid facts, I find that Cash Cow was engaged in giving advice

relating to investing in, purchasing, selling or otherwise dealing in securities or

investment products, through its website www.cashcowresearch.com. I note that

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the Account Opening Form for the ICICI Bank Account, copy of which was

forwarded by the bank to SEBI, that the type of industry of Cash Cow is

Commodities broking and advisory and the partners are mentioned as Mr. Amit

Jain (Noticee no. 3) and Mr. Shailendra Sen (Noticee no. 2). I note that the

Account Opening Form for the Axis Bank Account, copy of which was forwarded

by the bank to SEBI, that the type of industry of Cash Cow is advisory services

and the partners are mentioned as Mr. Chirag Sharma (Noticee no. 4) and Mr.

Shailendra Sen (Noticee no. 2). I also note from the documents provided by

Central Bank of India that the account was opened by partners, Mr. Amit Jain

(Noticee no. 3) and Mr. Shailendra Sen (Noticee no. 2). Further, I note that the

Noticees vide letter dated March 23, 2016 to SEBI had submitted that they had

incorporated a partnership firm on September 05, 2012 with 2 partners, Mr. Amit

Jain (Noticee no. 3) and Mr. Shailendra Sen (Noticee no. 2) and Mr. Chirag

Sharma (Noticee no. 4) joined as partner on October 15, 2014. The Noticees

submitted that the objective of the partnership was to offer broking services,

internet sales and advisory services in the share market and they initiated advisory

service in the month of August, 2014 and collected revenue from advisory services

from 22 clients. Thus, I find that Cash Cow was the partnership concern of Mr.

Shailendra Sen (Noticee no. 2), Mr. Amit Jain (Noticee no. 3) and Mr. Chirag

Sharma (Noticee no. 4) and were engaged in investment advisory activity. In view

of this, I find that Noticees were providing the investment advice, in lieu of

consideration. In terms of Regulation 2(1) (l) of IA Regulations, 2013 such an

advice is “investment advice”. Therefore, I find that Noticees were engaged in the

business of providing investment advice to public, for consideration and were thus,

acting as an investment adviser, as defined under Regulation 2(1) (m) of the IA

Regulations, 2013.

9. In this regard, the Noticees have submitted that services were being provided

under genuine and a bona-fide belief that the said business was well within the

scope of work of an authorised person of a sub-broker and that the Partners were

not required to obtain any separate registration as an investment advisor and that

they were not in violation of any SEBI Regulations. Further, the Noticees have

submitted that upon receiving SEBI letter on March 14, 2016 seeking information

about the alleged role as an investment advisor, they ceased the operations of

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Cash Cow with immediate effect. However, that because of their earlier

commitments, they were compelled to service the existing clients upto February

2017 in order to achieve a proper closure to their operations mainly as regards

their operations and also to minimize the losses of their then existing clients.

10. With regard to the aforesaid submissions of the Noticees, I note that it is a well

settled law that ignorance of law is no excuse. Hence, the Noticees cannot take

the plea that they had genuine and bona-fide belief that the said business was well

within the scope of work of an authorised person of a sub-broker as the provisions

of the SEBI Act, 1992 and the IA Regulations, 2013 are clear in this regard that a

person must obtain a certificate of registration before acting as an investment

advisor. I note that Section 12(1) of the SEBI Act, 1992 provides as under:

“No stock broker, sub-broker, share transfer agent, banker to an issue, trustee of trust

deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment

adviser and such other intermediary who may be associated with securities market shall

buy, sell or deal in securities except under, and in accordance with, the conditions of a

certificate of registration obtained from the Board in accordance with the regulations

made under this Act:”

11. In order to protect the interest of investors and to maintain integrity of the

securities market, IA Regulations, 2013 provides safeguards to ensure that the

investors who receive investment advice are protected. One such safeguard is

that any person carrying out investment advisory activities has to obtain

registration from SEBI as required under Regulation 3(1) of the IA Regulations,

2013. Regulation 3(1) provides that, “On and from the commencement of these

regulations, no person shall act as an investment adviser or hold itself out as an

investment adviser unless he has obtained a certificate of registration from the

Board under these regulations” and conduct its activities in accordance with the

provisions of IA Regulations. Further, I note that for seeking a certificate of

registration for acting as an investment adviser, an entity is required to satisfy

inter alia the following requirements, as provided under IA Regulations, 2013:

(i) An application for seeking certificate of registration to be made to Local Office,

Regional Office or Head Office, of SEBI, as the case may be, in Form A as

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specified in the First Schedule to IA Regulations, 2013 along with requisite non-

refundable application fee;

(ii) The applicant, in case of an individual investment adviser or its principal officer

in case of a non-individual investment adviser shall be appropriately qualified

and certified as under:

a. A professional qualification or post-graduate degree or post graduate

diploma (minimum two years in duration) in finance, accountancy,

business management, commerce, economics, capital market, banking,

insurance or actuarial science from a university or an institution

recognized by the Central Government or any State Government or a

recognised foreign university or institution or association or a

professional qualification by completing a Post Graduate Program in the

Securities Market (Investment Advisory) from NISM of a duration not

less than one year or a professional qualification by obtaining a CFA

Charter from the CFA Institute;

b. An experience of at least five years in activities relating to advice in

financial products or securities or fund or asset or portfolio

management;

c. Applicant in case of individual investment adviser or its principal officer

in case of a non-individual investment adviser, and persons associated

with investment advice shall have, at all times a certification on financial

planning or fund or asset or portfolio management or investment

advisory services, from (a) NISM; or (b) any other organization or

institution including Financial Planning Standards Board of India or any

recognized stock exchange in India provided such certification is

accredited by NISM.

(iii) Individual applicant must have net worth of not less than 5 lakh rupees and

non-individual applicant must have net worth of not less than 50 lakh rupees.

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12. Therefore, I note that safeguards provided under IA Regulations, 2013 requires

continued minimum professional qualification and net-worth requirement for

investment adviser, including disclosure of all conflict of interest, prohibition on

entering into transactions which are contrary to advice given for 15 days, risk

profiling of investors, maintaining documented process for selecting investment for

client based on client’s objective and risk profile, understanding the nature and

risks of products or assets selected for clients, etc. Hence, the contention of the

Noticees that they acted in genuine and bona fide belief is untenable.

13. Further, with regard to the submission of the Noticees that they ceased the

operations of Cash Cow with immediate effect in March 2016, but because of their

earlier commitments, they were compelled to service the existing clients upto

February 2017, I note that Cash Cow had submitted in March, 2016 to SEBI that it

would stop rendering such services and make changes to its website. However, I

note that subsequent to making submissions to SEBI in March, 2016 that they will

close their business, Cash Cow had mobilized Rs. 38,64,457/- during the period

April, 2016 to February, 2017. Hence, I note that the Noticees have continued to

act as investment advisors even after submitting to SEBI that it would stop its

unregistered investment advisory services. Further, the submission of the Noticees

that they were compelled to service their existing clients due to earlier

commitments is absolutely unacceptable and is an admission of their continuing

violation of the aforesaid provisions of the SEBI Act and IA Regulations in acting

as unregistered investment advisors. Hence, the aforesaid submissions of the

Noticees are untenable.

14. The Noticees have also submitted that Noticee no. 2 had cleared investment

advisor examination conducted by National Institute of Securities Market and

applied before SEBI for grant of certificate of registration as an investment advisor

under the proprietorship concern named ‘Capital Heed Financial Research’ and

registration was granted by SEBI w.e.f. December 29, 2017 and hence, any

violation that they may have committed in good faith during the period between

August 2014 to February 2017 may be pardoned. In this regard, I note that

proceedings were initiated by SEBI against Capital Heed Financial Research and

its proprietor Mr. Shailendra Sen (Noticee no. 2) and vide SEBI Order dated June

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01, 2021, it was held that:

“31. To sum up, I find that Mr. Shailendra Sen, when seeking registration from SEBI as an

investment adviser in his individual capacity, was under a statutory obligation to disclose his prior

activities in relation to the securities market including the unauthorized investor advisory activities

undertaken by his partnership firm in true and correct sense to SEBI. However, it is now clear that

he has knowingly made a false declaration in his application form for registration as investment

adviser stating that he was not engaged in investment advisory services prior to filing his

application thereby has intentionally furnished a false/misleading/wrong information to SEBI in

violation of Clauses 1 and 8 of the Code of Conduct for investment adviser read with regulation

15(9) of the IA Regulations. Moreover, the Noticee has also failed to disclose the fact of his earlier

engagement in the activities of Cash Cow in the capacity of a partner of the said firm, even after the

certificate of registration for Capital Heed was granted to him and such failure on the part of the

Noticee to disclose such information which was not disclosed at the time of obtaining the

registration has led to violation of regulation 13(b) of the IA Regulations. The aforesaid misconduct

on the part of the Noticee has also amounted to violation of regulation 13(a) of the IA Regulations.

At the same time, the Noticee has misrepresented to investors that it can provide PMS although it

did not hold a certificate of registration from SEBI to do so, thereby violating regulation 3 of PMS

Regulations, 1993.”

15. From the above order, I note that Noticee no. 2 had made false declaration in his

application form for registration as investment adviser under the proprietorship

concern named ‘Capital Heed Financial Research’ before SEBI, stating that he

was not engaged in investment advisory services prior to filing his application and

thereby had intentionally furnished a false/misleading/wrong information to SEBI.

Further, Noticee no. 2 had failed to disclose that it had engaged in investment

advisory services as a partner of Cash Cow even after the certificate of registration

for Capital Heed Financial Research was granted to him. I note that Noticee no. 2

had tried to conceal its unregistered activities from SEBI and this shows that the

conduct of the Noticee no. 2 has been dubious and not genuine. Therefore, grant

of registration by SEBI to Noticee no. 2 on the basis of misrepresentation cannot

be taken by Noticee no. 2 as mitigating factor to condone his unregistered

investment advisory activities carried along with other Noticees herein. In view of

such conduct, the contention of the Noticees that Noticee no. 2 had later obtained

SEBI registration under the proprietorship concern named ‘Capital Heed Financial

Research’ and any violation that they may have committed in good faith during the

Final Order in the matter of Cash Cow Broking & Advisory Solutions

Page 16 of 20

period between August 2014 to February 2017 may be pardoned is deplorable and

therefore, untenable.

16. The activities of the Noticees, as brought out from the various materials described

above, seen in the backdrop of the aforesaid provisions show that the Noticees

were holding themselves out and acting as an investment adviser for

consideration. However, it is noted that the Cash Cow was not registered with

SEBI in the capacity of Investment Advisor. Hence, I find that these activities/

representations as being made by the Noticees without holding the certificate of

registration as investment adviser are in violation of Section 12(1) of SEBI Act,

1992 read with Regulation 3(1) of the IA Regulations, 2013.

17. I note that in terms of Section 4 of the Indian Partnership Act, 1932 "Partnership" is

the relation between persons who have agreed to share the profits of a business

carried on by all or any of them acting for all”. Further, “Persons who have entered

into partnership with one another are called individually, "partners" and collectively

"a firm", and the name under which their business is carried on is called the "firm-

name". Thus, the partnership firm is nothing but all the partners acting together.

Therefore, Noticees no. 1 to 4 are in violation of Section 12(1) of SEBI Act, 1992

read with Regulation 3(1) of the IA Regulations, 2013.

18. From the bank account statement of the Noticees opened in the name of Cash

Cow with ICICI Bank (A/c No. 657305500056 and 004105014315), Axis Bank (A/c

No. 915020002699502) and Central Bank of India (A/c No. 3213140286), it is

observed that the aforesaid bank accounts received in aggregate, total credits of

Rs. 1,03,74,093/- during the period October 2015 to October 2017. I note that

partnership firm i.e. Cash Cow, in whose name all these bank accounts were

opened, had in the bank account opening forms indicated investment advisory

service as its business activity. Therefore, it is reasonable to draw an inference

that amounts credited in these bank accounts were towards investment advisory

services rendered by the Noticees. Further, I note that the complainant Mr. Vikram

Oswal has claimed that he had paid an amount of Rs. 10,000/- to the Noticees, for

availing investment advisory services from the Noticees.

Final Order in the matter of Cash Cow Broking & Advisory Solutions

Page 17 of 20

Directions:

19. In view of the foregoing, I, in exercise of the powers conferred upon me

under Sections 11(1), 11(4) and 11B, read with of Section 19 of the SEBI Act,

1992, hereby direct that:

(i) The Noticees shall within a period of three months from the date of coming

into force of this Order, jointly and severally, 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;

(ii) The Noticees shall issue public notice in all editions of two National Dailies

(one English and one Hindi) and in one local daily with wide circulation,

detailing the modalities for refund, including the details of contact person

such as names, addresses and contact details, within 15 days of coming

into force of this Order;

(iii) The repayments to the clients/investors shall be effected only through Bank

Demand Draft or Pay Order or electronic fund transfer or through any other

appropriate banking channels, which ensures audit trails to identify the

beneficiaries of repayments;

(iv) The Noticees are prevented from selling their assets, properties and holding

of mutual funds/shares/securities held by them in demat and physical form

except for the sole purpose of making the refunds as directed above;

(v) ICICI Bank, Axis Bank and Central Bank of India wherein Cash Cow is

holding accounts, are directed not to allow any debits/ withdrawals from and

credits to the aforesaid accounts, except for debits for the purposes of the

refunds as directed in para 19(i) above. ICICI Bank, Axis Bank and Central

Bank of India are directed to ensure that all the above directions are strictly

enforced;

(vi) After completing the aforesaid repayments, the Noticees shall file a report of

such completion with SEBI addressed to the Division Chief, CIS Division,

Final Order in the matter of Cash Cow Broking & Advisory Solutions

Page 18 of 20

Investment Management Department, SEBI Bhavan, Plot No. C4 A, G

Block, Bandra Kurla Complex, Bandra (East) Mumbai – 400051, within a

period of 15 days, after completion of three months from the coming into

force of this order, duly certified by an independent Chartered Accountant.

The restraint contained in para 19(iv) and (v) shall cease to operate once

the refund to the investors is complete and the report as contemplated

herein is filed;

(vii) In case of failure of the Noticees to comply with the aforesaid directions in

sub-para (i) and (vi) above, SEBI, on the expiry of the stipulated time period

therein may recover the amounts mentioned in para 18 above or any other

amount, as may be found to have been raised by the Noticees, from the

Noticees, in accordance with Section 28A of the SEBI Act, 1992 including

such other provisions contained in securities laws;

(viii) The Noticee no. 2 is debarred from accessing the securities market, directly

or indirectly and is prohibited from buying, selling or otherwise dealing in the

securities market, directly or indirectly in any manner whatsoever, for a

period of 2 (two) years from the date of this order or till the expiry of 2 (two)

years from the date of completion of refunds to investors as directed in

paragraph 19(i) above, whichever is later. However, in view of the SEBI

Order June 01, 2021 passed in the matter of M/s Capital Heed Financial

Research (Proprietor Mr. Shailendra Sen) against Noticee no. 2, whereby

debarment of 3 (three) years have been imposed on Noticee no. 2, the

debarment passed vide this direction against Noticee no. 2, shall run

concurrently with the debarment passed in the said Order dated June 01,

2021;

(ix) The Noticees no. 1, 3 and 4 are debarred from accessing the securities

market, directly or indirectly and are prohibited from buying, selling or

otherwise dealing in the securities market, directly or indirectly in any

manner whatsoever, for a period of 1 (one) year from the date of this order

or till the expiry of 1 (one) year from the date of completion of refunds to

investors as directed in paragraph 19(i) above, whichever is later.

Final Order in the matter of Cash Cow Broking & Advisory Solutions

Page 19 of 20

(x) The Noticee no. 2 is also restrained from associating with any company

whose securities are listed on a recognized stock exchange and any

company which intends to raise money from the public, or any intermediary

registered with SEBI in any capacity for a period of 2 (two) years from the

date of this order or till the expiry of 2 (two) years from the date of

completion of refunds to investors as directed in paragraph 19(i) above,

whichever is later;

(xi) The Noticees no. 1, 3 and 4 are also restrained from associating with any

company whose securities are listed on a recognized stock exchange and

any company which intends to raise money from the public, or any

intermediary registered with SEBI in any capacity for a period of 1 (one)

year from the date of this order or till the expiry of 1 (one) year from the date

of completion of refunds to investors as directed in paragraph 19(i) above,

whichever is later; and

(xii) The Noticees shall not undertake, either during or after the expiry of the

period of debarment/restraint as mentioned in paragraph 19(viii) to (xi)

above, either directly or indirectly, investment advisory services or any

activity in the securities market without obtaining a certificate of registration

from SEBI as required under the securities laws.

20. The direction for refund, as given in paragraph 19(i) above, does not preclude the

clients/investors to pursue the other legal remedies available to them under any

other law, against the Noticees for refund of money or deficiency in service before

any appropriate forum of competent jurisdiction.

21. The order shall come into force with immediately, however, in view of the

exceptional circumstances emerged due to the outbreak of a COVID-19 and

consequential restrictions imposed in different parts of the country, the directions

given in paragraph 19 except directions given in sub-paras 19(viii) to (xi), shall

come into force within 30 days from the date of this order.

Final Order in the matter of Cash Cow Broking & Advisory Solutions

Page 20 of 20

22. A copy of this order shall be sent to the Noticees, recognized Stock Exchanges,

the relevant banks, Depositories and Registrar and Transfer Agents of Mutual

Funds to ensure that the directions given above are strictly complied with.

Sd/-

Place: Mumbai ANANTA BARUA

Date: January 18, 2022 WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA