Market regulator Securities and Exchange Board of India (SEBI) has barred 4W Wealth Management Pvt Ltd and the firm’s directors Bhavesh P Bhensdadia, Rinkalkumar Mohanbhai Chopda, Vivek Laxmanbhai Patel, Nileshbhai Chandubhai Patel and Parth Kanubhai Patel (noticees) from markets for two years for operating illegal investment advisory and misleading stock advises. The illegal advisory is also asked to refund Rs12.83 crore collected as fees from its investor clients.
In an order, K Saravanan, chief general manager (CGM) of SEBI, says, "The noticees were engaged in the activities of providing investment advisory services without obtaining the requisite registration from SEBI, as required in terms of Section 12(1) of the SEBI Act, of the SEBI nvestment Advisers Regulations, 2013 (IA Regulations). Further, it was alleged that the amounts credited in the bank accounts of the noticee were received as fees towards the services rendered as an investment advisor.
SEBI had received a SCORES complaint from one Yogesh Kumar (complainant) against the noticees. Mr Kumat submitted that he received a call from a mobile number allegedly belonging to 4W Wealth Management where he was asked to do equity trading on trial basis for two days. Post acceptance of the proposal, he received three tips, out of which, with respect to two tips he made profits while with respect to one he made no loss no gain. After that he was regularly contacted by the representative of 4W Wealth Management and was forced to take subscription. However, post subscription, the tips never resulted into profit and the complainant suffered a loss of Rs15,000, he alleged.
An investigation by SEBI also revealed that the advisory was running a stock market tips business through its website www.4wwealthmanagement.com
It was observed that the noticee on its website had disclosed that they were providing leads from client databases for various industries and business houses and also provided stock market client database and product pricing. It was also mentioned on its website, ‘the best stock trader database for tele-callers in advisory & broker companies.’
SEBI hence issued a show-cause notice (SCN) to 4W Wealth Management and its directors.
In the order, the SEBI CGM says, "I note that 4W Wealth Management and its directors have collected around Rs12.83 crore in the bank account with Axis Bank, ICICI Bank, HDFC Bank and State Bank of India. The noticee has not produced any material to show the sources of this fund. However, narrations of the remarks of most of the entries point towards fees for investment advisory services."
SEBI directed 4W Wealth Management to refund within three months of the order's coming into force, the amount collected as fees for investment advisory from various people.
The noticee are restrained from selling his assets, properties, and holding of mutual funds, shares, and securities in demat and physical form except for the sole purpose of making the refunds.