Confirmatory order in the matter of Mr. Mansoor Rafiq Khanda and Mr. Feroz Rafiq Khanda

Sl. No. Name of the noticee PAN Mr. Mansoor Rafiq Khanda (proprietor of M/s Indian Trading 1. Company, M/s Option & M.C.X King, M/s A to Z Solution and ALMPK3448B M/s Fullon Corporation) 2. Mr. Feroz Rafiq Khanda (proprietor of M/s Fullon Corporation) AFMPK5766J 1. Vide ad interim ex-parte order dated June 05, 2014 (hereinafter referred to as the 'interim order') Mr. Mansoor Rafiq Khanda (proprietor of M/s Indian Trading Company, M/s Option & M.C.X King, M/s A to Z Solution and M/s Fullon Corporation) and Mr. Feroz Rafiq Khanda (proprietor of M/s Fullon Corporation) (hereinafter collectively referred to as the 'noticees' or by their respective names) were restrained from accessing the securities market and were prohibited from buying, selling or dealing in securities, in any manner whatsoever, till further directions. They were further directed to:– (a) cease and desist from acting as an investment advisors and not to solicit or undertake such activities or any other unregistered activity in the securities market, directly or indirectly, in any manner whatsoever; (b) immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, websites, etc. in relation to their investment advisory or any unregistered activity in the securities market. 2. The interim order was passed on the basis of prima facie findings that the noticees had been offering trading tips through Short Message Services (SMSs)/WhatsApp sent from mobile numbers (viz., 9913266412, 8306257818, 9173461311, 09925305293 and 8306773041) and websites, namely, www.fullonoption.com. The contents of the messages were as follows:

Order in respect of Mr. Mansoor Rafiq Khanda & Ors.

"My company Indian trading provides tips, 25000 deposit payment profit 30% share. Sir 50000 only investment and 200% sure guarantee call. 1 Re no loss" "Earn more than 25 to 50 Lakh per month in our Super Jackpot Stock-Mcx- Currency Tips - 9925305293" 3. These messages also carried certain enticing claims such as: (a). total profit `9 lakh in `2 lakh capital; (b). `9 lakh in one month with `50,000/- capital; (c). earn more than `25 lakh to `50 lakh per month in our superjackpot stock – MCX; (d). Profit `8 lakh in `1 lakh capital; (e). Profit `18 lakh in `1 lakh capital. 4. SEBI had received complaints in the above regard and upon making telephone calls, during the preliminary examination, to the mobile numbers used for the above SMSs it is noted that the operators of these mobile numbers directed the callers to their websites (www.fullonoption.com) and make necessary registration fee payment into their bank account(s). It was noted that the noticees followed the following modus operandi: i. Send SMS to investors with inducing claims and citing references to the website addresses viz., “www.fullonoption.com”, inviting prospective investors to enrol with them for their investment advisory services for a registration fee. ii.

The registered clients are then provided trading tips for a consideration/profit sharing. 5. It has also been prima facie found in the interim order that the noticees engaged in the activities of giving trading tips, stock specific recommendations, etc. to the investors on a contractual basis on payment of fees which fall within the definition of activities of “investment advisor” as defined under regulation 2(m) of the SEBI (Investment Advisers) Regulations, 2013 (Investment Advisors Regulations). Since they have acted as investment advisors without obtaining registration from SEBI they have prima facie contravened the provisions of section 12(1) of the SEBI Act, 1992 read with provisions of regulation 3 of the Investment Advisers Regulations. It has been further prima facie found in the interim order that the noticees have made known misrepresentations by making unrealistic claims and they have also made representation in reckless and careless manner in their messages and website and have suggested facts which are not true. By their acts and omissions they have solicited, enticed and induced investors to deal in securities on the basis of their investment advices, stock trade tips, etc. Thus, noticees who were connected with each other have prima facie acted in fraudulent and deceitful manner and contravened the provisions of section 12A (a) (b) and (c) of the SEBI Act and regulation 3 (b), (c) and (d) and regulation 4(1) and 4(2) (k) and (r) of the of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations).

6. Pursuant to the interim order, the noticees filed their common reply vide letter dated June 17, 2014 wherein they inter alia made the following submissions: (a). Mr. Feroz Rafiq Khanda has assumed full responsibility in respect of the allegations/charges in the interim order. He has submitted that his brother, Mr. Mansoor Rafiq Khanda is fully occupied in his textile business and has not participated in any of the activities as referred to in the interim order. Mr. Feroz Rafiq Khanda has also prayed that the allegations/charges against Mr. Mansoor Rafiq Khanda be dropped. (b). Though the bank accounts described in the interim order were in the names of Mr. Mansoor Rafiq Khanda and Mr. Feroz Rafiq Khanda, they were controlled by Mr. Feroz Rafiq Khanda. Mr. Mansoor Rafiq Khanda had no knowledge about the activities being carried on by Mr. Feroz Rafiq Khanda. (c). The noticees have completely stopped their activities since August 2013 and the website „www.fullonoption.com‟ is not operational since September, 2013. Similarly, the email id „fulloncorp@gmail.com‟ is also now non-operational/discontinued.

(d). The noticees have not asked any person or investors to entrust them with any funds and have not caused any loss to the investors. (e). No complaints are received from the investors regarding any substantial losses or misguidance. (f). The noticees have not made any huge gain. (g). In the absence of any complaint of having made any misrepresentations of reckless and careless nature or of unrealistic claims, the noticees may not be taken to have acted in "fraudulent manner" or "deceitful manner" and the provisions of 2(1) (c) of the PFUTP Regulations may not be invoked. Thus, it may not be viewed as attracting prohibitions enshrined in section 12A(a)(b) and (c) of the SEBI Act and regulation 3(b),(c) and (d) and 4(1), 4(2)(k) and (r) of the PFUTP Regulation. (h). The noticees did not realize that their activities require registration under the SEBI Act, 1992 and the Investment Advisors Regulations. Considering the facts and circumstances and the fact that the noticees have realized their lapse, they may not be treated as unregistered Investment Advisors and may be pardoned. 7. The noticees were also given an opportunity of personal hearing on August 12, 2014 when Mr. Tushar V. Shah, Advocate, appeared and made inter alia the following oral submissions on their behalf : (a) It was actually Mr. Feroz Rafiq Khanda who had been undertaking the activities alleged in the interim order and his brother Mr. Mansoor Rafiq Khanda had no knowledge or connection with the activities of Mr. Feroz Rafiq Khanda as he is exclusively occupied in his textile business.

(b) In view of these facts the allegations/charges against Mr. Mansoor Rafiq Khanda be dropped. (c) Mr. Feroz Rafiq Khanda has stopped the activities as alleged in the interim order and the website www.fullonoption.com is not functional/operational since September 2013. (d) After August 2013, Mr. Feroz Rafiq Khanda has stopped undertaking any activity as alleged in the interim order and as such the allegations/charges qua Mr. Feroz Rafiq Khanda be dropped. 8. With regard to the observations in para 20 of the interim order in respect of the activities of Mr. Imtiyaz Hanif Khanda (proprietor of M/s. Right Trade and M/s. Sai Traders), Mr. Vali Mamad Habib Ghaniwala (proprietor of M/s Bull Trader and M/s Laxmi Traders), the counsel for the noticees confirmed that Mr. Imtiyaz Hanif Khanda is related to the noticees in this case. 9. I have carefully considered the allegations/charges against the noticees, their replies and relevant material available on record. It is noted that while admitting to the allegations/ charges described in the interim order Mr. Feroz Rafiq Khanda has attempted to take up the sole responsibility with regard to the allegations/charges described in the interim order. With regard to the submissions of the noticees in this regard, I note that the bank account no. '913020051857131' as disclosed on the WhatsApp message to the prospective investors is in the name of M/s Indian Trading Company. It is undisputed fact that Mr. Mansoor Rafiq Khanda is the sole proprietor of M/s Indian Trading Company and the said bank account no. '913020051857131' with Axis Bank, Surat, Gujarat was opened and operated by him. 10. It is further noted that the following bank accounts were disclosed on the website of www.fullonoption.com for making payments by the prospective investors.

Sr. Entity Bank Account Bank Name and Proprietor Address No. No. Branch 1 M/s Fullon 085005500802 ICICI Bank, Surat, Mr. A/605, Shilpraj Corporation Gujarat. Mansoor Apartment, Rafiq Adajan Patiya, Khanda Surat, -395009 Gujarat 2. M/s Fullon 33131936514 State Bank of India Mr. Feroz Flat No. A/7, Corporation Rafiq Sardar Complex, 913020033489310 Axis Bank, Surat, Khanda Gujarat Housing Gujarat Board, 50200001578790 HDFC Bank, Surat, Adajan,Surat- Gujarat 395009

11. From the KYC and account opening forms of the ICICI Bank, State Bank of India and Axis Bank, it is noted that Mr. Mansoor Rafiq Khanda and his brother Mr. Feroz Rafiq Khanda are the common proprietors of M/s Fullon Corporation. Furthermore, from the PAN details of Mr. Mansoor Rafiq Khanda and Mr. Feroz Rafiq Khanda, it is noted that two more bank accounts in the name of M/s Option & M.C.X King and M/s A to Z Solution, respectively whose sole proprietor is Mr. Mansoor Rafiq Khanda, were used for receiving payments from the prospective investors. Following are the details of the said bank accounts:

Sr. No. Entity Bank Account No. Bank Name Proprietor Address and Branch 1 M/s Option & 913020052272399 Axis Bank, Mr. Mansoor Flat No. M.C.X King Surat, Rafiq Khanda A/7, Gujarat. Sardar 2. M/s A to Z 913020051407482 Axis Bank, Complex, Solution Surat, Gujarat Gujarat Housing Board, Adajan,Su rat- 395009 12. The above facts and circumstances prima facie indicate the role of Mr. Mansoor Rafiq Khanda in the alleged activities done using the above bank accounts or at least they were undertaken by Mr. Feroz Rafiq Khanda with his knowledge and complicity. I, therefore, am not inclined to accept the contention that Mr. Mansoor Rafiq Khanda had no knowledge or connection with the activities alleged in the interim order. 13. From the material available on record it is noted that the noticees continued their activities and invited investments using SMSs/WatsApp chat with the complainant even during November 2013. Further, pursuant to the SMSs/WhatsApp, exchanged between the noticees and complainant on December 13, 2013 the complainant made investments with the noticees and deposited `25,000/- in the bank account (913020051857131) of the noticees with Axis Bank.

In my view, factors such as receipt of complaint, loss incurred by any investors, etc. are not the essential factors for taking enforcement actions as done in this case. Nevertheless, I note that, in this case, SEBI had received complaints from investors with regard to the activities of the noticees as described in the interim order and some of them had even complained of having incurred losses on investments made by them on the basis of advice/enticement of the noticees. In this case, the conduct of the noticees have prima facie been found inimical to the interest of investors in the securities market and the interim order has been passed to prevent them from further misleading investors and impairing the integrity of the market. I, therefore, do not agree with submissions of the noticees. 14. I find that the noticees have not been able to show sufficient and plausible cause to draw any inference other than those drawn in the interim order with regard to their activities in the securities market. They have admitted to the alleged activities and have failed to make out a prima facie case to revoke or modify the directions issued vide the interim order.

It is noted that even after the interim order SEBI has been receiving complaints from the investors against the noticees with regard to their prima facie fraudulent activities. Such complaints have pointed out that the noticees have been using the mobile numbers described in the interim order as well as some other mobile numbers. Thus, the possibility of involvement of other persons alongwith the noticees cannot be ruled out. Admittedly, the noticees are connected with other entities who have prima facie found to have indulged in similar activities adopting the same modus operandi as that of the noticees and have been restrained vide orders dated August 20, 2013 and December 30, 2013. I further note that the investigations in this case and the other one are ongoing. In these facts and circumstance, the balance of convenience is also not in favour of the noticees. The directions issued against the noticee vide the interim order are preventive and remedial. I, therefore, am of the considered view that no intervention is called for, at this stage, in either vacating the interim directions or modifying it.

15. I, therefore, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11(1), 11(4) and 11B thereof, hereby confirm the directions issued in respect of Mr. Mansoor Rafiq Khanda (proprietor of M/s Indian Trading Company, M/s Option & M.C.X King, M/s A to Z solution and M/s Fullon Corporation) (PAN: ALMPK3448B) and Mr. Feroz Rafiq Khanda (proprietor of M/s Fullon Corporation) (PAN: AFMPK5766J) vide ad-interim ex-parte order dated June 05, 2014. 16. The directions issued vide the interim order dated June 05, 2014 shall continue to be in force till further directions.

Sd/ DATE: September 15th, 2014 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA