Confirmatory Order in the matter of MI Research (Proprietor Mr. Ashish Jain)

WTM/MPB/IMD-DoF-1/WRO-PLO/96/2020

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: MADHABI PURI BUCH, WHOLE TIME MEMBER ORDER Under Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 and Regulation 35 of Securities and Exchange Board of India (Intermediaries) Regulations, 2008

In Re: Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 In respect of:

S. No. Name of the Entity PAN 1 MI Research and its Proprietor Mr. Ashish Jain ANIPJ1043K

In the matter of MI Research

Background of the case:

1. MI Research, a proprietary firm (hereinafter referred to as “MIR” / “IA”) is registered as an Investment Adviser under the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (hereinafter referred to as the “IA Regulations”) with effect from November 02, 2017. The SEBI registration No. is INA000008783. The proprietor of MI Research is Mr. Ashish Jain. The registered office address of MI Research is at 18, Old Palasia, 101, AB Kanchan Sagar Apartment, Indore. M.P. – 452001.

2. Securities and Exchange Board of India (“SEBI”) received complaints through SCORES portal against an unregistered entity namely, A2 Financial Services, a partnership firm (hereinafter referred to as “A2FS”), inter alia alleging its engagement in unregistered

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain investment advisory activities. The partners of A2FS are Mr. Ashish Jain and Mr. Ashutosh Mishra.

3. SEBI conducted an examination in relation to the affairs of A2FS. The examination entailed inter alia an analysis of the details available on the website of A2FS, complaints filed by the complainants and bank account details of A2FS. Upon perusal of Account Opening Forms (AoF) and KYC documents of A2FS obtained from ICICI bank and Axis Bank, it was observed that one of the partners Mr. Ashish Jain, having PAN: ANIPJ1043K, is currently registered with SEBI as an Investment Advisor under the proprietorship MI Research.

4. Upon perusal of the Application Form A submitted by Mr. Ashish Jain at the time of applying for registration of MI Research, the following was observed:

4.1. Mr. Ashish Jain through his application dated March 14, 2017, has declared that he was not engaged in investment advisory services prior to making the said application. 4.2. Mr. Ashish Jain once again in his revised application dated July 24, 2017, has again declared that he was not engaged in investment advisory services prior to making the said application.

Direction in Interim Order:

5. In view of the, prima facie, findings against Mr. Ashish Jain, Proprietor of MI Research, SEBI, vide ad interim ex parte order dated August 30, 2019, had directed that, “…..MI Research and Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain its proprietor, Mr. Ashish Jain stands prohibited from accepting any fresh clients until further orders. MI Research shall disclose the contents of these directions on its website(s) immediately and submit certificate of compliance with evidence to SEBI.”

6. With regard to the compliance of SEBI direction, MI Research vide letter dated September 02, 2019 had submitted the screen shot of its website displaying that “we are not accepting new clients in our company, we are only working for our old clients”.

Observations in Interim Order:

7. The prima facie findings in the Interim Order are as under:

7.1. Mr. Ashish Jain and Mr. Ashutosh Mishra are the partners of the partnership firm, A2FS, which is in the business of providing tips and advisory services in commodity and equity share market from August 18, 2014 to January 2018. 7.2. A2FS is not registered with SEBI in the capacity as an Investment Advisor. Mr. Ashish Jain being one of the partners of A2FS had provided services of an investment adviser through A2FS without a certificate of registration during the period August 18, 2014 to January 2018. 7.3. An act done by all or any partner of the partnership firm is an act by the partnership firm and vice versa. Hence, in the present case, the activities carried out by A2FS are basically the activities carried out by its partners and in the limited context of the present matter, Mr. Ashish Jain who was one of the partners of A2FS.

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

7.4. At the time of submitting an application form for registration, Mr. Ashish Jain, proprietor, MI Research, had twice submitted the undertaking that he was not involved / engaged in investment advisory services prior to making the said application. On the basis of said declaration and other documents attached to the said application form, SEBI had granted registration to Mr. Ashish Jain, proprietor, MI Research under IA Regulations on November 02, 2017. 7.5. Mr. Ashish Jain, Partner, A2FS and Mr. Ashish Jain, proprietor, MI Research are one and the same person. Mr. Ashish Jain, as a Partner of A2FS has carried on unregistered investment advisory activities from August 18, 2014 to January 2018 i.e. prior to and after obtaining SEBI registration (registration granted on November 02, 2017) in the name of Mr. Ashish Jain, proprietor, MI Research. 7.6. Mr. Ashish Jain while applying to SEBI for registration as an Investment Advisor through the proprietorship MI Research, had prima facie submitted false and misleading undertaking to SEBI stating that “…I am not involved in any Investment Advisory activity prior to filling application to SEBI. Further I am also submitting that I will not engage in any Investment Advisory activity before getting registration from SEBI”. 7.7. Mr. Ashish Jain, prima facie, was involved in unauthorized/ unregistered investment advisory services through A2FS before applying to SEBI for registration and continued to carry out unauthorized/ unregistered investment advisory services through A2FS even after obtaining SEBI registration. 7.8. By rendering unregistered investment advisory services and by willfully concealing the same and submitting false and misleading information to SEBI, Mr. Ashish Jain has

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain committed illegal acts and created unlawful gain to himself in the form of obtaining certificate of registration from SEBI. 7.9. Further, as per Regulations 13(b) of IA Regulations, Mr. Ashish Jain, proprietor MI Research, after obtaining SEBI registration, was under an obligation to inform SEBI in writing, if any information or particulars previously submitted to SEBI are found to be false or misleading. Thus, it is noted that even after obtaining SEBI Registration, Mr. Ashish Jain, proprietor MI Research, failed to submit the correct information to SEBI in accordance with Regulations 13(b) of IA Regulations. 7.10. Mr. Ashish Jain, prima facie, by continuing to carry out unauthorized/ unregistered investment advisory services through A2FS, even after obtaining SEBI Registration and also by not informing SEBI in writing about the prima facie wrong/ false undertaking to SEBI, after obtaining the SEBI Registration, has not acted in honesty and fairness, thereby prima facie violating the Clause 1 of Code of Conduct for Investment Adviser read with Regulation 15(9) of IA Regulations.

8. Vide said interim order dated August 30, 2019, SEBI had advised Mr. Ashish Jain, proprietor MIR to file his reply/ objections to the said interim order within 21 days from the date of receipt of the said interim order and also to indicate in his reply whether he desires to avail an opportunity of personal hearing on a date and time to be fixed on a specific request made in that regard, if any.

9. Vide letter dated August 31, 2019, the said interim order dated August 30, 2019 was sent to Mr. Ashish Jain, proprietor MIR through hand delivery and the same was delivered.

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

Reply and Hearing:

10. MIR vide letter dated September 05, 2019, acknowledged the receipt of interim order dated August 30, 2019, and requested for opportunity of hearing.

11. In the interest of natural justice, SEBI vide notice of hearing dated October 01, 2019, granted an opportunity of personal hearing to Mr. Ashish Jain, proprietor MIR on October 16, 2019, at Head Office, Mumbai. On October 16, 2019, Mr. Vivek Shrivastava, Advocate, Mr. Ankit Jain, Advocate, Mr. Mukesh Siroya (Company Secretary) and Mr. Pulkit V Mehta (Chartered Accountant), Authorized Representatives (hereinafter referred to as “ARs”) on behalf of Mr. Ashish Jain, proprietor MIR had appeared for hearing and made inter alia oral submissions which are as under:

“……

11.1. That Mr. Ashish Jain had no malafide intention while filing undertaking along with application form. 11.2. That in the application form there is no instruction on how to fill the form i.e. there is no example on how to fill the form. Mr. Ashish Jain treated proprietor firm separate from partnership firm. 11.3. That Partnership firm is separate entity and the act of the partner in the capacity of the partner, the partnership firm can be held responsible. But if a partner/person does any act in his own capacity then partnership firm would not be held responsible. 11.4. That since inception the conduct of MIR is good and out of 640 clients, there are only 2 complaints from clients which he had resolved.

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

11.5. That Mr. Ashish was the partner in the partnership firm but not involved in the advisory services. 11.6. That suo moto Mr. Ashish Jain had applied for the registration certificate. 11.7. That this business is Mr. Ashish Jain bread and butter of his family and because of interim order his earning is stopped …….”

12. Vide letter dated October 16, 2019, ARs on behalf of Mr. Ashish Jain, proprietor MIR had inter alia made following submissions:

12.1. That Mr. Ashish Jain had started MIR in the year 2017 as a proprietary business which is engaged in the Investment Advisory Services to its clients. 12.2. That MIR applied for the registration as an Investment Advisor in the proprietary capacity. 12.3. That clause 1(d) of Application Form-A requires the information regarding legal structure of the applicant. Mr. Ashish Jain in the application mentioned it as a “Proprietorship Concern”. 12.4. That clause 1(g) of Application Form-A, required the applicant to inform whether the applicant is engaged in investment advisory services prior to making application under these regulations. Mr. Ashish Jain stated “No” to this question; 12.5. That the bona fide understanding of Mr. Ashish Jain was that the application was being filed by the MIR as a Proprietorship firm, of which Mr. Ashish Jain is the sole proprietor and MIR had never been engaged in Investment Advisory Services, and therefore it was selected as “No”;

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

12.6. That neither the IA Regulations nor the Application Form provides for any specific disqualifications for any person while making an application for IA registration. Furthermore, even in the general instructions to fill the Form A, as per First Schedule of IA Regulations, nothing has been provided with any examples such as whether the Applicant ever engaged in IA business as a partner of a partnership firm or director of a body corporate etc. 12.7. With respect to the relationship drawn in SEBI order between partnership firm, partner and proprietary firm, of a partner, it is submitted that the interpretation that “acts done by all or any partner of the partnership firm is an act done by the partnership firm and vice versa” is against the spirit of the Section 25 of the Indian Partnership Act, 1932, which is read as: “Every partner is liable jointly with all the other partners and also severally, for all acts of the firm done while he is a partner.” Therefore, essentially only the partners can be jointly and severely held liable in their capacity as partners for acts done by the partnership firm, and not vice versa; 12.8. That A2FS (PAN: AABFA0964B), a Partnership Firm, and MIR (PAN: ANIPJ1043K), a Sole Proprietary Firm, are two distinct and separate legal entities, both firms are identified and assessed separately in the Income Tax Department, the former being a partnership firm and the latter being a proprietorship firm. 12.9. That the default done by A2FS should not be considered as default done by MI Research, 12.10. That Mr. Ashish Jain has remained a person of good standing and he himself and MIR inter-alia have never been involved in any activity which is against the law or the interest of a person or a group of persons.

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

12.11. That there was no mala fide intention of Mr. Ashish Jain to disregard the regulations laid down by SEBI. Mr. Ashish Jain’s suo-moto application for registration as IA in Form-A, is a testimony to the fact. 12.12. From the date of obtaining the registration under the IA Regulations, MIR has acquired 648 clients, out of which 2 clients (0.31% of the total clients) lodged their grievances against MIR in the SCORES. These grievances were resolved with utmost priority in time bound manner and in the interest of Investors and there are no pending grievance against MIR as on date; 12.13. That MIR has not caused any loss to the Investors or group of Investors thereby upholding the primary object of the Act; 12.14. That MIR is a small Investment Advisory concern, and livelihood of Mr. Ashish Jain and his staff depends on functioning of the firm. Mr. Ashish Jain is a sole earning member of the family which comprises of himself, his wife and a three-year-old son. The survival of his family depends on business of MIR. 12.15. That Mr. Ashish Jain had no mala fide intentions to violate the any provisions of the Act and IA Regulations and the fact that Mr. Ashish Jain applied for registration Suo-Moto, which is testimony to his bona fide credentials. Further, considering his personal and financial situation and family background, it is requested to kindly have a lenient view and reconsider prohibitory order against Mr. Ashish Jain and MI Research.

13. Mr. Ashish Jain, proprietor of MIR vide letter dated October 21, 2019, had submitted additional written submission in the matter and once again requested of opportunity of hearing. The additional written submission inter alia is as under:

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

13.1. That the undertaking given by Mr. Ashish Jain Proprietor MI Research, at the time of applying for the Certificate of Registration is due to difference of understanding in the application form and there is an error in mindlessness. 13.2. That in year 2017 when Mr. Ashish Jain applied for Registration, there was a difference in understanding between the declaration submitted and the separation between the Partnership Firm and Proprietorship Firm. He further submit that any kind of work in any kind of proprietorship in the past was not done by him. 13.3. A2FS is a Partnership Firm and MIR is a sole Proprietorship Firm. 13.4. While submitting the Application form for Registration, he left the job from the A2FS and also when he was working with A2FS, he was involved in management work not personally involved in Operation Work of A2FS. 13.5. That he started A2FS partnership firm with Mr. Ashutosh Mishra and worked for 2 years. While working with A2FS, he came to know that it needs registration, so he studied NISM Module. After clearing NISM module, he applied for Registration with the Name of MI RESEARCH. 13.6. MIR is a Small Scale company. They maintain RPM properly with the clients and provide research guidance. They have Approx. 650 paid clients and all are satisfied with their Research and Services.

With respect to Continuation of the Business of A2FS, after the registration of MIR:

13.7. After submitting application for registration under the IA Regulations with SEBI, he had completely disassociated himself from the day to day activities of the partnership

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain firm and after obtaining the registration he had not taken any single penny from the partnership firm to his personal account. 13.8. At the time of submitting application for registration, he had an understanding that A2FS, a Partnership Firm, and MIR, a Sole Proprietary Firm, are two distinct and separate legal entities. He had not done any willful or intentional act, expression, omission or concealment to deceit anyone in any manner whatsoever. He had no mala fide intentions whatsoever to mislead SEBI while submitting the Application for registration of MIR but it was and is a genuine belief that he simply had to disclose his individual involvement in IA activities.

14. Acceding to the request of Mr. Ashish Jain, Proprietor MIR, in the interest of natural justice, SEBI vide notice of hearing dated December 02, 2019 granted another opportunity of personal hearing to Mr. Ashish Jain, proprietor MIR on December 19, 2019 at Head Office, Mumbai. On December 19, 2019, Mr. Ashish Jain and Mr. Ankit Jain had appeared for hearing and made oral submissions which are as under:

“…….

14.1. In 2017, Mr. Ashish Jain had applied for registration of certificate. While applying for registration, Mr. Ashish Jain has to give an undertaking stating whether he was involved in any investment advisory activity prior to filling application to SEBI, to which he stated that he was not involved. The said undertaking was submitted due to unawareness about filling the application form and also because there was a misunderstanding, considering he was applying as proprietorship and previously working in partnership firm, which are two different entity.

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

14.2. In A2FS, he was only a partner on paper, but he had worked only for a job as an employee. While working in A2FS, he came to know that such kind investment advisory work can be done only through SEBI registration for which he had cleared 2 NISM module, thereafter he applied for registration in the name of MI Research as proprietorship. 14.3. Mr. Ashish Jain did not know till when A2FS was carrying unregistered investment advisory services because he left A2FS in February 2017. 14.4. Mr. Ashish Jain left A2FS in February 2017, however he did not have any evidence / proof regarding his resignation from A2FS or dissolution of partnership firm. 14.5. MIR got registration on November 02, 2017, since than MIR has given proper investment advisory services and clients are happy with them. The same can be infer from the fact that out of 640 clients, there are only 2 complaints from clients which MIR had resolved. 14.6. MIR had followed all the guidelines, rules and regulation of SEBI.

With respect to his submission that clients are happy and satisfied with the advisory services of MIR, Mr. Ashish Jain submit the satisfaction / feedback emails sent by their clients to MIR. Upon perusal of one of the email dated August 30, 2019 of client Dr. Chandra Shekar, it is noted that Dr. Chandra Shekar was impressed by the accuracy rate of MIR and he was told accuracy will be around 80% to 90%, however, he had experienced more than 90% to 95%. In this regard, Mr. Ashish Jain clarified that accuracy rate was of advisory tips.

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

Consideration and Findings:

15. In light of the observations of the interim order and submission made by Mr. Ashish Jain, Proprietor MIR, the following issue arises for consideration:

Issue: Whether in light of the facts and circumstances of the case, the findings of the interim order and the submissions of Mr. Ashish Jain, Proprietor MIR in response thereto, the directions issued in the Interim Order need to be continued, revoked or modified in any manner?

16. Considering the facts and circumstances of the case including the replies of Mr. Ashish Jain, Proprietor MIR to the findings of the interim order, I observe the following:

16.1. Prima Facie findings on A2FS carrying on unregistered investment adviser activity: 16.1.1. It is prima facie alleged in the interim order that, Mr. Ashish Jain and Mr. Ashutosh Mishra were the partners of the partnership firm, A2FS, which was in the business of providing tips and advisory services in commodity and equity share market from August 18, 2014 to January 2018. A2FS was not registered with SEBI in the capacity as an Investment Advisor. Mr. Ashish Jain, being one of the partners of A2FS, had provided services of an investment adviser through A2FS without a certificate of registration during the period August 18, 2014 to January 2018. 16.1.2. In this regard, Mr. Ashish Jain, Proprietor MIR contended that he started A2FS partnership firm with Mr. Ashutosh Mishra and worked for 2 years. While

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain working with A2FS, he came to know that it needs registration, so he studied NISM Module. After clearing NISM module, then he applied for Registration with the Name of MI RESEARCH. 16.1.3. Thus, from the submission of Mr. Ashish Jain, Proprietor MIR, I note that he has not disputed but rather he has accepted that he is the partner in partnership firm, namely A2FS, though he has denied being a partner after February 2017. 16.1.4. Mr. Ashish Jain, proprietor MIR, further contended that while working with A2FS, he was involved in management work and not personally involved in operation work of A2FS. In this regard, from the partnership deed dated September 06, 2014, I note the following: 16.1.4.1. That Mr. Ashish Jain and Mr. Ashutosh Mishra were the partners of A2FS and carrying business of providing tips and advisory services in commodity and equity share market from August 18, 2014. 16.1.4.2. That both Mr. Ashish Jain and Mr. Ashutosh Mishra shall have equal rights on setting up and continuing the business as well as on infrastructure of A2FS. 16.1.4.3. That both Mr. Ashish Jain and Mr. Ashutosh Mishra shall share 50% profit each from the said business. 16.1.4.4. That both Mr. Ashish Jain and Mr. Ashutosh Mishra shall share equal responsibilities towards creditor and liabilities arising out of said business. 16.1.4.5. That official responsibilities of the business shall be same for both Mr. Ashish Jain and Mr. Ashutosh Mishra.

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

16.1.5. I also note that Mr. Ashish Jain had not submitted any documentary evidence such as resignation letter to A2FS, acceptance of his resignation by A2FS, bank statement showing that he has not received any amount from A2FS either in the form of salary or profit from business or any other document which proves that he had dissociated himself from A2FS at the time of applying and after obtaining registration from SEBI. 16.1.6. Thus, from the contents of the partnership deed of A2FS and non-production of evidence to the contrary, I note that Mr. Ashish Jain is equally involved in the operational work and responsibilities of A2FS as was Mr. Ashutosh Mishra. Hence, I do not find any merit in the contention of Mr. Ashish Jain that he was not personally involved in operational work of A2FS. 16.1.7. Therefore, I am of the view that, there is a prima facie finding that A2FS was not registered with SEBI in the capacity as an Investment Advisor and Mr. Ashish Jain being one of the partners of A2FS had provided services of an investment adviser through A2FS without a certificate of registration during the period August 18, 2014 to January 2018.

16.2. Act of the partnership firm/ partners: 16.2.1. Interim Order mentioned that an act done by all or any partner of the partnership firm is an act by the partnership firm and vice versa. Therefore, in the present case, the activities carried out by A2FS are basically the activities carried out by its partners and in the limited context of the present matter, by Mr. Ashish Jain who was one of the partners of A2FS.

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

16.2.2. In this regard, Mr. Ashish Jain proprietor contended that the interpretation that “acts done by all or any partner of the partnership firm is an act done by the partnership firm and vice versa” is against the spirit of the Section 25 of the Indian Partnership Act, 1932, which is read as: “Every partner is liable jointly with all the other partners and also severally, for all acts of the firm done while he is a partner.” Therefore, essentially only the partners can be jointly and severely held liable in their capacity as partners for acts done by the partnership firm, and not vice versa. Further, partnership firm is separate entity and the act of the partner in the capacity of the partner, the partnership firm can be held responsible. But if a partner/ person does any act in his own capacity then partnership firm would not be held responsible. 16.2.3. I note that as per Section 4 of Indian Partnership Act, 1932, the ‘partnership’ is the relation between persons who have agreed to share the profits of a business carried on by all or any of them for all; persons who have entered into partnership with one another are called individually ‘partners’ and collectively a ‘firm’ and the name under which their business is carried on is called the ‘firm name’. As per Section 2(a) of Indian Partnership Act, 1932, an ‘Act of Firm’ means any act or omission by all the partners, or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm. As per Section 25 of Indian Partnership Act, 1932, every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. Thus, from the above it is noted that an act done by all or any partner of the partnership firm is an act by the partnership firm for which all partners are liable. Therefore, even

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain if one of the partners makes commission or omission, the other partners are liable for such commission and omission in view of Section 25 of the Indian Partnership Act, 1932. Therefore, Mr. Ashish Jain being one of the partners of A2FS is liable as a partner for acts of the firm, A2FS even in cases where the said act/omission was made by other partners. I note that Mr. Ashish Jain admitted that he started the partnership firm named A2FS with Mr. Ashutosh Mishra and the different clauses of the partnership deed of A2FS show that he was an equal partner in this partnership in all respects. Therefore, I note that he is liable for all the acts and omissions of the partnership.

16.3. Allegation of submission of wrong information at the time of obtaining registration: 16.3.1. Interim Order alleged that Mr. Ashish Jain while applying to SEBI for registration as an Investment Advisor through the proprietorship MI Research, had prima facie submitted false and misleading undertaking to SEBI stating that “…I am not involved in any Investment Advisory activity prior to filling application to SEBI. Further I am also submitting that I will not engage in any Investment Advisory activity before getting registration from SEBI”. Interim order also alleged that Mr. Ashish Jain, prima facie, was involved in unauthorized / unregistered investment advisory services through A2FS before applying to SEBI for registration and continued to carry out unauthorized / unregistered investment advisory services through A2FS even after obtaining SEBI registration. 16.3.2. In this regard, Mr. Ashish Jain, Proprietor MIR had made following submission:

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

16.3.2.1. Mr. Ashish Jain understanding was that the application was being filed by the MIR as a Proprietorship firm, of which Mr. Ashish Jain is the sole proprietor and MIR had never been engaged in Investment Advisory Services, and therefore it was selected as “No”. Therefore, the undertaking given by Mr. Ashish Jain Proprietor MI Research, at the time of applying for the Certificate of Registration is due to difference of understanding in the application form. 16.3.2.2. Neither the IA Regulations nor the Application Form provides for any specific disqualifications for any person while making an application for IA registration. Furthermore, even in the general instructions to fill the Form A, as per First Schedule of IA Regulations, nothing has been provided with any examples such as whether the Applicant ever engaged in IA business as a partner of a partnership firm or director of a body corporate etc. 16.3.2.3. While submitting the Application form for Registration, he left the job from the A2FS. Further, after submission of application for registration under the IA Regulations with SEBI, he had completely disassociated himself from the day to day activities of the partnership firm and after obtaining the registration he had not taken any single penny from the partnership firm to his personal account. 16.3.3. From the submission, I note that Mr. Ashish Jain had clarified that he had submitted an undertaking under the assumption that MIR had never been engaged in Investment Advisory Services prior to making an application. In this regard, upon perusal of the undertaking, I note that in the undertaking Mr. Ashish Jain

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain stated that he was not involved in any investment advisory activity prior to the filling application to SEBI. Further, Hon’ble Supreme court in Ashok Transport Agency v. Awadhesh Kumar & another, [(1998) 5 SCC 567] noted that “…..A proprietary concern is only the business name in which the proprietor of the business carries on the business. A suit by or against a proprietary concern is by or against the proprietor of the business…”. Therefore in view of the said Judgment, I am of the view that a proprietary concern and its proprietor are one and the same. Hence, I do not find any merit in the said contention of Mr. Ashish Jain. 16.3.4. He has also stated that while filling application form, as per First Schedule of IA Regulations, no examples has been provided with, such as whether the Applicant ever engaged in IA business as a partner of a partnership firm or director of a body corporate etc. In this regard, it is necessary to examine the Form A, which is part of the IA Regulations and is used by applicants desirous of seeking registration as investment advisers, to apply to SEBI. The Form requires the applicant to provide information that is relevant to the legal structure under which it is applying for registration. The Form clearly states that the legal structures can be either one of individual (which includes proprietorship), company, partnership firm, limited liability partnership or body corporate other than company or LLP. Under the heading of “General Information”, the applicant has to mention its “Legal Structure” i.e., whether applicant is an individual, body corporate (including company), partnership firm or limited liability partnership. Under the heading “Details of Applicant: In case applicant is an individual”, there is a field stating

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain “Details of ownership/ directorship of the applicant in any companies or partnership interest in any firm or limited liability partnership”. I note that this field makes it very clear that where the applicant is an individual, he/ she is required to provide details of his/ her ownership/ directorship in any company or his/ her partnership interest in any firm or LLP. From the application form which was submitted by Mr. Ashish Jain while seeking registration, I note the following: 16.3.4.1. The “Legal Structure” of the applicant has been mentioned as “Individual”. Hence, Mr. Ashish Jain has applied under the Individual category, which includes proprietorship. 16.3.4.2. In the field where Mr. Ashish Jain was required to mention his partnership details in A2FS, he has modified the phrase “Details of ownership/ directorship of the applicant in any companies or partnership interest in any firm or limited liability partnership”, mentioned in Clause in 2.I.5 of the format provided in Form A, to read as “Details of ownership/ directorship of the applicant” and has mentioned “Proprietorship” against it. But for this modification of the relevant clause of the format, Mr. Ashish Jain would have had to provide the information on details of his partnership in A2FS being a partnership firm. But changing the format, I note that Mr. Ashish Jain has withheld vital information from SEBI at the time of applying for registration. 16.3.5. Mr. Ashish Jain, Proprietor MIR, further submitted that at the time of submission of the Application form for Registration, he left the job from A2FS and after obtaining the registration he had not taken any single penny from the partnership firm to his personal account. In this regard, I note that Mr. Ashish Jain had not

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain submitted any documentary evidence such as resignation letter to A2FS, acceptance of his resignation by A2FS bank statement showing that he has not received any amount from A2FS either in the form of salary or profit from business, change of signatory to bank accounts of A2FS or any other document which proves that he had dissociated himself from A2FS at the time of applying and after obtaining registration. Hence, in the absence of documentary evidence, I do not find any merit in the said contention of Mr. Ashish Jain, Proprietor MIR. Thus, I am of the view that Mr. Ashish Jain was prima facie involved in unauthorized/ unregistered investment advisory services through A2FS before applying to SEBI for registration and continued to carry out unauthorized/ unregistered investment advisory services through A2FS even after obtaining SEBI registration. 16.3.6. I note over here that Mr. Ashish Jain has withheld vital information in Form A from SEBI when applying for registration. The information pertaining to his partnership interest in A2FS would have had a direct bearing on his application for registration and I note here that he has modified the format of Form A as per his convenience. As such, the misrepresentation made in Form A is sufficient, on a standalone basis, to sustain the allegation that he has submitted wrong information at the time of seeking registration from SEBI.

17. In view of the above, at this stage, I find no merit in the submissions of Mr. Ashish Jain, Proprietor MIR, and he has failed to give a plausible reason/ explanation, along with Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain documentary evidence, for the allegations/ prima facie findings as described in the interim order dated August 30, 2019.

18. Therefore, in order to protect the interest of investors, based on the prima facie findings brought out in the interim order that by rendering unregistered investment advisory services and by willfully concealing the same and submitting false and misleading information to SEBI, Mr. Ashish Jain has committed illegal acts and created unlawful gain to himself in the form of obtaining certificate of registration from SEBI, I find that the facts and circumstances of the case as brought out in the Interim Order have not changed and balance of convenience is not in favor of dis-continuation or modification or revocation of the directions passed in the Interim Order. However, I note here that the disclosure made by Mr. Ashish Jain on the website of MI Research regarding the directions of the Interim Order is not appropriate and does not give the correct picture to existing and prospective clients. Appropriate directions in this regard are mentioned in the operative part of this Order.

ORDER

19. In view of the foregoing, I, in exercise of the power conferred upon me under sections 11(1), 11(4), and 11B read with section 19 of the Securities and Exchange Board of India Act, 1992, and Regulation 35 of Securities and Exchange Board of India (Intermediaries) Regulations, 2008 hereby confirm the directions issued vide Interim Order dated August 30, 2019. Further,

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain

I direct that Mr. Ashish Jain shall mention the following disclosure on the website of MI Research:

“In terms of SEBI Order dated August 30, 2019, MI Research and its proprietor, Mr. Ashish Jain, stands prohibited from accepting any fresh clients until further orders.”

Along with this disclosure, a link to the SEBI Order dated August 30, 2019, as well as this Order, shall also be provided on the website with the heading “Link to SEBI Order”.

20. A copy of this order shall be served upon MI Research and its proprietor Mr. Ashish Jain, Banks, Stock Exchanges, Registrar and Transfer Agents and Depositories for necessary action and compliance with the above directions.

Sd/-

DATE: JANUARY 30, 2020 MADHABI PURI BUCH

PLACE: MUMBAI WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

Order in the matter of M/s MI Research – Proprietor Mr. Ashish Jain