SEBI Bars Rahul Arya of EEMRS for 2 Years, Slaps Rs11 lakh Penalty
Moneylife Digital Team 28 October 2024
Market regulator Securities and Exchange Board of India (SEBI) has barred Rahul Arya of Equity Express Market & Research Services (EEMRS) for two years for providing unregistered investment advisory services. While slapping a fine of Rs11 lakh, SEBI also asked him to refund Rs58.40 lakh collected as fees from clients, investors or complainants.
 
In an order, G Ramar, quasi-judicial authority (QJA) of SEBI, says, "I note that Mr Arya activities show that he was acting as an investment adviser (IA) through the website equityexpress.com without holding the requisite certificate of registration as an investment adviser from SEBI. Further, Mr Arya knowingly misrepresented himself as a SEBI-registered entity to investors or clients and collected money from the investors. Such misleading representations are deceptive and fraudulent in nature and hence in violation of Regulation 3(a), (b), (c)  &  (d), 4(1)and  4(2)(k)of the PFUTP Regulation."
 
SEBI initiated proceedings against Equity Express Market & Research Services, led by Mr Arya, following multiple complaints regarding unauthorised investment advisory services. The investigation began after SEBI received a complaint on 8 January 2019, from a registered IA, also named Rahul Arya.
 
Mr Arya, the SEBI registered IA, alleged that Rahul Arya from EEMRS was improperly utilising his SEBI registration certificate to offer investment advisory services. Additionally, another complaint was filed by Mahesh Aware on 8 August 2019, alleging that he had paid Mr Arya from EEMRS for trading calls but had not received a refund.
 
SEBI investigation revealed significant findings. It was noted that the website of EEMRS, equityexpress.in claimed to be a leading investment advisory firm, asserting that it provided top tips in various equity and commodity segments. The website further claimed to be a SEBI-registered investment advisory firm, which it was not. Archived versions of the site highlighted misleading representations and the availability of various subscription packages for trading tips.
 
Moreover, SEBI obtained know-you-customer (KYC) and bank account details related to EEMRS, revealing that he received substantial funds, amounting to over Rs58.40 lakh, in his two bank accounts. 
 
Further, SEBI Investigation traced various transactions to these accounts, many of which were associated with unregistered investment advisory services. Screenshots of WhatsApp conversations provided by complainants confirmed payments made to the noticee for trading calls. The examination of bank statements showed a pattern of credits labelled with terms such as equity, investment and trading related, further substantiating the allegations of unauthorised advisory services.
 
SEBI also restrained Mr Arya from selling assets, properties, and mutual funds, shares, and securities held by them in demat and physical form except for the sole purpose of making the refunds.
 
"Mr Arya shall not undertake, either during or after the expiry of the period of restraint and prohibition, 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," the market regulator says.
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