Best Stock Solutions vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision: 03/07/2017

Misc. Application No.30 of 2017 And Appeal No.33 of 2017

Best Stock Solutions 7th Floor, Crescent Business Park, Sakinaka, Telephone Exchange Lane, Andheri (East), Mumbai - 400 072. ... Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Joyashish Mitra, Chartered Accountant for the Appellant.

Ms. Omna Oak a/w Mr. Anuj Athalye, Advocate i/b Legasis Partners for the Respondent.

CORAM : Justice J.P. Devadhar, Presiding Officer Jog Singh, Member Dr. C.K.G. Nair, Member

Per : Justice J.P. Devadhar (Oral)

Misc. Application No.30 of 2017 in Appeal No.33 of 2017:

1.

By this Misc. Application, Appellant seeks condonation of 257 days

delay in filing the Appeal. For the reasons stated in the Misc. Application,

delay is condoned. Misc. Application is disposed of accordingly. 2

Appeal No.33 of 2017:

2. This appeal is filed to challenge the order passed by the

Adjudicating Officer ("AO" for short) of Securities and Exchange Board

of India ("SEBI" for short) on 3rd May, 2016. By the said order, penalty

of Rs.12 lakh is imposed on the appellant under Section 15HB of SEBI

Act, 1992, mainly on ground that the appellant had functioned as an

Investment Adviser for a prolonged period without obtaining

registration from SEBI which was in violation of Section 12(1) of the

SEBI Act read with Regulation 3(1) of the SEBI (Investment Advisers)

Regulations, 2013 ("Investment Advisers Regulations" for short).

3. Authorised representative of the appellant fairly stated that the

appellant had acted as an Investment Adviser without any registration.

However, it is submitted by the authorized representative of the

appellant that the said acts were done inadvertently, that too for a very

small consideration and immediately after applying for registration, the

appellant had voluntarily stopped the said activity. In these

circumstances, it is submitted by the authorized representative that the

AO of SEBI ought to have taken lenient view and ought not to have

imposed exorbitant penalty of Rs.12 lakh. Accordingly, it is submitted

that the impugned order be quashed and set aside or alternatively it is

submitted that the penalty be reduced to the extent as this Hon'ble

Tribunal deems fit and proper.

4. We see no merit in the above contentions. 3

5. In the present case, fact that the appellant functioned as an

Investment Adviser for a prolonged period without seeking registration

from SEBI is not in dispute. Fact that SEBI had repeatedly addressed

several letters calling upon the appellant to seek registration under the

Investment Advisers Regulations and till registration was granted not

to function as Investment Adviser, is also not in dispute. As per the

letters addressed by SEBI, the appellant ought to have applied for

registration latest by 21st October, 2013, which the appellant failed to

comply. In fact, the appellant finally applied for registration on 13th

June, 2014.

6. Thus, in the fact of present case, finding recorded by the AO of

SEBI that the appellant violated the SEBI Act and the Investment

Advisors Regulations for a prolonged period cannot be faulted.

7. Section 15HB of the SEBI Act provides that, where a person fails

to comply with any of the provisions of SEBI Act or Rules or

Regulations made thereunder for which no separate penalty has been

provided, then, that person shall be liable to penalty which shall not be

less than one lakh rupees but which may extend to one crore rupees.

Thus, in the present case, since the violation of Investment Advisers

Regulations continued for a prolonged period, the penalty imposable

on the appellant under Section 15HB would be Rs.1 crore. However

after taking into consideration all mitigating factors, the AO of SEBI has 4

imposed a penalty of Rs.12 lakh which cannot be said to be

unreasonable or excessively harsh.

8. In the result, we see no merit in the appeal and the same is

hereby dismissed with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

Dr. C.K.G. Nair Member 03/07/2017 Prepared & compared by-dg