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
Total 65,51,563
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
BELOW 171.50 SL 172.60
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