Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs3 lakh on Gagan Hora, a registered investment advisor (IA), for conspiring with one Ravi Prakash Tripathi and his illegal investment advisory Signal2Success. He is also barred from the markets for six months.
In the order, Ashwani Bhatia, whole time member (WTM) of SEBI, says “ It has already been brought out that the noticee (Mr Hora) had an arrangement with Mr Tripathi whereby the registration number of the noticee was displayed on the website, the investment advice provided was redistributed to the clients and as a consequence of the same, the noticee received monetary consideration. Additionally, by way of this arrangement, Mr Hora had aided and abetted Signal2Success in escaping the regulatory oversight applicable to a registered entity.
These actions clearly demonstrate the failure of the noticee, who is an investment adviser, to comply with the IA regulations.”
One Swapan Kumar Pandit filed a complaint alleging that he had invested Rs50,000 in Signal2Success and the investment advisory registration found on its website signal2success.com belonged to Mr Hora.
The investigation by SEBI found that Mr Tripathi, the proprietor of Signal2Success, was a client of Mr Hora and they both conspired to run the illegal investment advisory. The registration number of Mr Hora was used by Signal2Success and masqueraded as a registered advisory.
A show cause notice was issued to Mr Hora. In contention, he stated that he did not need to collude with Signal2Success. “There was no discussion between him and Mr Tripathi about clients, revenues, business, income, and profits of Signal2Success.”
Mr Hora stated that an agreement was executed between them and it ended in March 2020. He provided investment advice only to Mr Tripathi and is not involved in providing it to the clients of Signal2Success, he contended.
However, SEBI found the contentions of Mr Hora to be false. In the perusal of the WhatsApp account and submissions, it was found that Mr Hora started a WhatsApp group comprising the employees of Signal2Success. The market regulator found it surprising that someone who had no interest in the business of Signal2Success started a WhatsApp group where he, Mr Tripathi, and the employees of the illegal investment advisory closely interacted. It also contradicted the claim of Mr Hora that he was giving investment advice to Mr Tripathi in his personal capacity.
The WhatsApp conversation between Mr Hora and Mr Tripathi revealed that Signal2Success used the registration number of Mr Hora with his consent.
“ It has already been brought up that he was a member of the WhatsApp group, ‘Signal2Success ADVISORY’ which had as its members Mr Tripathi and his employees. It has also been brought out that on 10 December 2019, the noticee (Mr Hora) had told Mr Tripathi, ‘you can advise your clients to write 11800Dec 25 PE on dips with stop loss of Nifty level of 11780 (spot)...’ Notwithstanding the assertions of the noticee, brought out above, he had actively asked Ravi Prakash Tripathi to communicate the investment advice to the clients.”