Regulations
SEBI orders Vijay Kumar Gaba to cease and desist from acting as a portfolio manager

Vijay Kumar Gaba had persuaded an investor, Madan Mohan Sharma, to invest in shares and securities and assured a return of 30% per annum

 

In a SEBI Order, Vijay Kumar Gaba (VKG) has been directed to cease and desist from acting as a portfolio manager. Further,  the SEBI Order has said that steps have to be taken to prevent VKG from soliciting and collecting funds from investors and carrying on portfolio management services without due registration from SEBI. It becomes necessary for SEBI to take urgent preventive action. “In the light of the same, I find there is no other alternative but to take recourse through an ad interim ex-parte order against VKG for preventing him from collecting funds and offering portfolio management activities without obtaining registration from SEBI in accordance with the law,” said the SEBI Order.
 
SEBI has a statutory duty to protect the interests of investors in securities and promote the development of, and to regulate, the securities market. Section 11 of the SEBI Act has empowered it to take such measures as it deems fit for fulfilling its legislative mandate enshrined in SEBI Act read with PMS Regulations for the purpose of investor protection.
Regulation 2(cb) of PMS Regulations reads as: “portfolio manager” means any person who pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or the funds of the client, as the case may be.
 
SEBI received a complaint from Madan Mohan Sharma against  VKG and Master Capital Services Limited (MCSL) alleging inter alia that VKG persuaded Sharma to invest in shares and securities and assured a return of 30% per annum. Sharma has also alleged that VKG and MCSL connived and cheated Sharma to the tune of Rs6.60 crore.
 
Sharma in his complaint said, “Initially, I was not interested and was hesitant in making investment, but due to his representation and categorical assurance of giving 30% return on the principal amount irrespective of the fluctuation of the market and saying that he and his trading member would be liable as he is taking my money, I handed over different cheques of total Rs5.85 crore from 01.07.2006 to 22.09.2006 drawn on Syndicate Bank, Khan Market, New Delhi to Vijay Kumar Gaba. I had not filled the name of the payee in the cheques, only signed. Thereafter, Vijay Gaba took various signatures on various blank forms and on query replied that these are just formality. He further took Rs1 crore in the month of October 2007 which was also given through 2 cheques of Rs50 lakh each. The undersigned has paid Rs3,15,000/- to VKG in the first week of October 2006 as his fee through cheque. On demand of 30% return as promised by VKG, he started buying time and wrote me several letters and undertaking admitting his liability and promised to pay the amount. Ultimately on 10.12.2010 he executed a mutual agreement wherein he has again admitted his liability and promised to pay the amount in a time bound manner mentioned in the agreement."
 
In view of Sharma’s complaint, SEBI felt, “I find that these activities are in violation of various provisions of PMS Regulations and could put investors at great risk. Considering the facts and circumstances of the case, there is a likelihood that VKG may continue to carry out this business in contravention of PMS regulations, which may lead to his engaging with more investors in such a manner.”
 
Finally, SEBI took action on the portfolio manager on the complaint of an investor and did not feel that it was an isolated dispute.
 

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Nifty, Sensex may drift higher– Thursday closing report

Nifty will head higher subject to dips caused by global sell-offs

 

Market sentiments were boosted by the surprise rate cut from Reserve Bank of India (RBI) on Thursday, which resulted in the benchmarks recording strong gains. We had mentioned in Wednesday’s closing report that a close above yesterday’s high will support a bullish position although the indices were weakening. The big gap in opening on Thursday was followed by the indices progressively moving higher except for some volatility at the beginning and at the end of the session.
 
S&P BSE Sensex opened at 27,831 while CNX Nifty opened at 8,425. Sensex moved from the low of 27,704 to 28,195 and closed at 28,076 (up 729 points or 2.66%). The 50-share Nifty hit a low 8,381, moved to the level of 8,527, and closed at 8,494 (up 217 points or 2.62%). NSE recorded a volume of 107.84 crore shares. India VIX fell 6.31% to close at 16.1600.
 
Before the market opening today, RBI announced a surprise cut in repo rate under the liquidity adjustment facility by 25 basis points to 7.75%.
 
Finance Minister Arun Jaitley hailed the decision of RBI to cut the interest rate, saying it is a positive development for the Indian economy and will certainly help in reviving the investment cycle the government is trying to restore.
 
The RBI's unexpected 25 basis points rate cut does not change the country's sovereign credit profile, an analyst at Fitch Ratings told the media.
 
Interest rate sensitive stocks like HDIL (18.59%), Indiabulls Real Estate (10.55%) and DLF (10.39%) were among the top four gainers in the ‘A’ group on the BSE.
Pipavav Defence and Offshore (4.50%) was the top loser in ‘A’ group on the BSE. In it December 2014 ending shareholding pattern the FIIs holding were reduced from 2.28% in September 2014 to 1.36%, DIIs holding were also reduced from 14.03% to 13.56% while retail shareholding were increased from 39.19% to 40.58%.
 
Except for Hindalco (0.18%) and Hindustan Unilever (0.05%) all the other stocks in the Sensex 30 pack closed in the green. HDFC (7.16%) was the top gainer followed by SBI (5.02%) and ICICI Bank (4.60%).
 
On Wednesday, US indices closed in the red. US retail sales dropped 0.9% in December, the biggest slide since January 2014, following a 0.4% gain in November that was smaller than previously estimated, according to the Commerce Department.
 
Except for NZSE 50 (0.12%) and Taiwan Weighted (0.16%) all the other Asian indices closed in the green. Shanghai Composite (3.54%) was the top gainer.
 
In China, the latest data showed that Chinese banks issued 697.3 billion yuan ($112.5 billion) worth of new loans in December, down from 852.7 billion yuan in November. Total social financing, a broader measurement of credit in the economy, rose to 1.69 trillion yuan in December from 1.15 trillion yuan in November. China's foreign exchange reserves stood at $3.84 trillion at the end of December, down from $3.89 trillion at the end of September.
 
European indices and US premarket futures were extremely volatile in the afternoon (declining deeply into the red from a strong rally) after Swiss National Bank shocked investors by removing its currency ceiling against the Euro and slashing its deposit rate to negative 0.75%. This is what caused the sharp selloff later in the session in India.
 
However, at the time of writing, European markets had turned around strongly and US Futures were trading in the green.
 

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SpiceJet: Marans, Kal Airways give control to co-founder Ajay Singh

SpiceJet co-founder Ajay Singh, who holds 4.5% stake has been given control of the ailing carrier by promoters Maran and Kal Airways

 

Beleaguered budget carrier SpiceJet on Thursday said that it decided to transfer ownership, management and control of the company back to its co-founder Ajay Singh from Sun Group chairman Kalanithi Maran and Kal Airways.
 
SpiceJet in a statement, said: "The Board has further directed the company to take further steps to implement and undertake all necessary steps including to make the appropriate application before the Ministry of Civil Aviation, Government of India for seeking approval of the ‘Scheme of Reconstruction and Revival for the takeover of ownership, management and control of SpiceJet Ltd’.
 
Maran had acquired SpiceJet for close to Rs750 crore in 2010. However, the carrier suffered losses and landed in debt due to cash crunch.
 
Promoters, Maran and Kal Airways hold 53.48% stake, while Ajay Singh hold 4.5% in SpiceJet. Retail investors hold 45.69% in the company that has a total market value of Rs1,000 crore. Major public shareholders in SpiceJet, includes Tata group unit Ewart Investments (1.79%) and Kalpana Singh (1.41%). 
 
SpiceJet closed Thursday 3% higher at Rs18.65 on the BSE, while the 30-share Sensex ended the day 2.7% up at 28,075.
 

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