Equity99 Suspended for 3 Months by SEBI for Non-compliance
Moneylife Digital Team 25 January 2024
Market regulator Securities and Exchange Board of India (SEBI) has suspended the certificate of registration (CoR) of Mumbai-based Equity99 (noticee) for three months for non-compliance with directions issued by SEBI. In its investigation, SEBI found that Equity99 committed serious contraventions, including qualification and certification requirements, format of agreement, risk profiling, general responsibility, redressal of client grievances, know-your-client (KYC) procedures and display of mandatory information.
In an order , Dr Anitha Anoop, chief general manager (CGM) of SEBI, highlighted that Equity99’s principal officer Rahul Sharma, was providing investment advice without a valid certificate from the National Institute of Securities Markets (NISM) that had expired around 20 months ago. This was considered a violation of Regulation 15(13) and Regulation 7(2) of the SEBI (Investment Advisers) (IA) Regulations.
"It is pertinent to mention that despite the initiation of the present proceedings against the notice, the noticee has not taken any steps and / or produced any documentary evidence to show that it is in the process of getting its certification renewed. Further, with respect to communicating the risk profiling with the clients as required under the IA Regulations, I find that the noticee not only has not produced any documentary evidence to place on record compliance but has made contradictory statements which clearly shows the casual approach of the Noticee towards the regulatory enforcement proceedings," the CGM says in the order.
SEBI also mentioned that Equity99 sold research reports to individuals without having the registration of a research analyst and without making disclosures to the individuals to whom the research report was sold. During the inspection period from 1 April 2021 to 31 August 2022, SEBI found that Equity99 sold research reports to individuals who are not clients but members of a Telegram channel of Equity99 for Rs46.67 lakh. 
Further, Equity99 has also been undertaking risk profiling incorrectly or improperly. "The noticee has not only been selling wrong services or products to the clients, which are not as per their suitability but also has been conducting its business not in the best interest of its client. It was also observed that during the inspection period, the noticee had not displayed the name and contact details of the compliance officer in its office in terms of the SEBI circular and therefore violated the SEBI regulations."
During the investigation, SEBI found that Equity99 had not included the term investment advisor (IA) in its name, which is a violation of the provisions of Regulation 13(a) and (c) of the IA Regulation, 2013. The company also failed to obtain registration with CDSL Ventures Ltd, NSDL Database Management Ltd (NDML), and KYC registration agencies (KRAs), which are mandatory for following the KYC procedure specified by SEBI.
Further, SEBI noticed that Equity99 collected funds from two clients, Arun Joshi and Nikhil Jawahire, even though their agreements and KYC processes were still pending completion. "The process followed by the noticee that the clients had paid the fees to the noticee first, and then all the formalities of agreement and KYC were completed. In view of the same, it is alleged that Equity99 has violated the provisions of Regulation 19(1)(d) of  IA Regulations."
Equity99's registration is suspended for three months or until the time Mr Sharma renews his requisite NISM certification under Regulation 7 of the IA Regulations, 2013, whichever period is higher, SEBI says.
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