Final Order in the matter of Right Target Advisory Services

Background 1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) received a complaint dated June 13, 2019, wherein it was alleged that Right Target Advisory Services (hereinafter referred to as ‘Noticee no. 1’/‘firm’) was providing investment advisory services from a website called https://righttarget.in/ without obtaining registration from SEBI. On the basis of such complaint, SEBI carried out a preliminary examination to ascertain whether unregistered investment advisory activities are being carried out by the firm.

Final Order in the matter of Right Target Advisory Services

2. It is noted in the course of the said preliminary examination that the website https://righttarget.in/ was active at that time in which the firm had presented itself as an Investment Adviser/Tips Provider. The website of the firm had also contained information that it was offering packages in stocks trading/investment tips in cash, futures and options segments to its clients as part of its investment advisory services. 3. It was observed from the website of the firm that an account with City Union Bank (hereinafter referred to as ‘CUB’) bearing account number 27XXXXXXXXXXX56 and another account with Bank of Baroda bearing account number 59XXXXXXXXXX89 were mentioned under the head payment details. However, upon inquiry with the two aforesaid banks, it was found out that the said two bank accounts were opened in the name of one Mr. D Kumar (hereinafter referred to as ‘Noticee no. 5’). Further examination of the aforementioned website of the firm showed that the firm also has bank accounts with ICICI Bank Ltd. (A/c. No. 61XXXXXXXX21), HDFC Bank Ltd. (A/c No.: 50XXXXXXXXXX16) and Axis Bank Ltd. (A/c. No. 91XXXXXXXXXXX36). As per the account opening form submitted by the account holder to ICICI Bank Ltd. as well as the documents submitted with the payment gateway CC Avenue, while opening the accounts with them, it was prima-facie found that the firm was a partnership firm wherein Mr. M Ashok Kumar (hereinafter referred to as ‘Noticee no. 2’), Mr. D Murugan (hereinafter referred to as ‘Noticee no. 3’) and Mr. D Saravanan (hereinafter referred to as ‘Noticee no. 4’) were the partners of Noticee no. 1 by virtue of partnership deed dated March 09, 2013. Further, the address of Noticee no. 1 was stated to be ‘No. 469, Madurai Road, Thirumangalam, Madurai, Tamil Nadu and Noticee no. 3 (D Murugan) was shown as Authorized signatory in the aforesaid accounts maintained with ICICI Bank Ltd and HDFC Bank Ltd. whereas, the name of Final Order in the matter of Right Target Advisory Services

Noticee no. 2 was mentioned as a contact person in the merchant details submitted by CC Avenue and all the three partners viz. Noticees no. 2 to 4 had signed the agreement with CC Avenue as the partners of Noticee no. 1. 4. It was observed during the examination that none of the Noticees was registered with SEBI to act as an Investment Adviser in the securities markets. 5. A further scrutiny of the materials available on record showed that the aforesaid website of the firm was active at the time of preliminary examination. It was observed that Noticee no. 1, at the time of inviting the investors to invest in the securities market as per various investment advisory services rendered to the clients, was also making tall claims before the public through its website such as ’85-95% accuracy rate to its calls’ etc. 6. I note from the material available on record that the pricing details for various investments products being offered by Noticee no. 1 as mentioned on the aforementioned website were as following: Table 1: Subscription plans: S.No. Package One Month Three Months Six months One Year Fee (in Rs.) Fee (in Rs.) Fee (in Rs.) Fee (In Rs.) 1 Stock Cash 6000 15000 30000 55000 2 Stock Future 10000 28000 55000 100000 3 Stock Option 8000 20000 45000 80000 4 Nifty Futures 6000 15000 30000 55000 5 Stock Combo (Cash + Fut) 14000 40000 80000 160000 6 Stock Combo (Fut+Opt) 15000 42000 85000 180000 7 Stock Combo (Fut + Nifty) 14000 40000 80000 160000 8 Stock Combo (Nifty + Opt) 12000 33000 68000 130000

Final Order in the matter of Right Target Advisory Services

9 All in One Pack 28000 80000 160000 320000 10 Jackpot Tips 12500 35000 68000 130000 11 Bonanza Future Tips 15000 40000 80000 165000 12 Bonanza Option Tips 12000 30000 60000 130000 7. A preliminary examination into the abovementioned five bank accounts, three opened in the name of the firm and the two accounts opened in the name of Noticee no. 5, showed that the Noticees have prima-facie collected a total sum of INR 43,83,290/- in the aforesaid five bank accounts by way of 1471 transactions during the period of operations of the firm, viz. March 10, 2013 to December 09, 2020. 8. In the light of the fact that the Noticees were continuously luring gullible investors by making unreasonable and outlandish claims through the aforesaid website and monies were continuously being collected from the investors in the aforesaid five bank accounts by offering them various investment advisory packages in an unauthorized manner, it was deemed necessary by SEBI to take urgent and preventive action in this matter to stop the Noticees from collecting any more fees from the public and from indulging in such unauthorized investment advisory activities. Therefore, an ex-parte ad Interim Order dated December 09, 2020 (hereinafter referred to as “Interim Order”) under Sections 11, 11B(1) and 11D of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) was passed wherein the above activities of the Noticees were prima facie held to be in violation of the provisions of Section 12(1) of the SEBI Act read with Regulation 3(1) of the SEBI (Investment Advisers) Regulations, 2013 (hereinafter referred to as “IA Regulations, 2013”). 9. On the basis of the aforesaid findings from the preliminary examination, the evidence gathered during the examination and considering the sensitive nature

Final Order in the matter of Right Target Advisory Services of the allegedly illegal advisory activities being undertaken by the Noticees, in order to protect the interest of investors in the securities market and, as a preventive measure, Interim Order was passed to prevent the Noticees from carrying on those illegal investment advisory services both directly or indirectly, which were prima-facie found to be being undertaken in violation of the provisions of SEBI Act as well as IA Regulations, 2013. Consequently, the following directions were issued against the Noticees in the aforesaid Interim Order: - “22.1. Right Target Advisory Service and its partners, Mr. M Ashok Kumar, Mr. D Saravanan, Mr. D Murugan and Mr. D Kumar are directed to: 22.1.1. Cease and desist from acting as an investment advisor including the activity of acting and representing through any media (physical or digital) as an investment advisor, directly or indirectly, and cease to solicit or undertake such activity or any other activities in the securities market, directly or indirectly, in any matter whatsoever, until further orders. 22.1.2. Not to divert any funds raised from investors, kept in bank accounts and/or in their custody until further orders. 22.1.3. Not to dispose of or alienate any assets, whether movable or immovable, or any interest or investment or charge on any of such assets held in their name, including money lying in bank accounts except with the prior permission of SEBI. 22.1.4. Immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, communications etc., physical or digital in relation to their investment advisory activity or any other unregistered activity in the securities market until further orders. 22.1.5. Not to access the securities market and buy, sell or otherwise deal in securities in any manner whatsoever, directly or indirectly, until further orders. 22.1.6. To provide a full inventory of all assets held in their name, whether movable or immovable, or any interest or investment or charge on any of such assets,

Final Order in the matter of Right Target Advisory Services including details of all bank accounts, demat accounts and mutual fund investments, immediately but not later than 5 working days from the date of receipt of this order. 22.1.7. To submit the number and details of clients who have availed their investment advisory services and to submit details of fees collected from each such client, immediately but not later than 5 working days from the date of receipt of this order. 22.2. If Right Target Advisory Service or its partners have any open positions in any exchange traded derivative contracts, as on the date of the order, they can close out/ square off such open positions within 3 months from the date of order or at the expiry of such contracts, whichever is earlier. Right Target Advisory Service and its partners are permitted to settle the pay-in and pay-out obligations in respect of transactions, if any, which have taken place before the close of trading on the date of this order. 22.3. ICICI Bank Ltd. (A/c no.: 61XXXXXXXX21), HDFC Bank Ltd. (A/c No.: 50XXXXXXXXXX16) and Axis Bank Ltd. (A/c no.: 91XXXXXXXXXXX36) wherein Right Target Advisory Service is holding an account and City Union Bank (A/c no.: 27XXXXXXXXXXX56) and Bank of Baroda (A/c no.: 59XXXXXXXXXX89) where Mr. D Kumar is holding an account, are directed not to permit any debits/ withdrawals and not to allow credits to the said accounts, without the permission of SEBI. CC Avenue where Right Target Advisory Service is holding an account, is directed to deactivate the said account till further orders. The Banks and payment gateway are directed to ensure that all the above directions are strictly enforced. 22.4. The Depositories are directed to ensure that till further directions not to permit any debits and not to allow any credits in the demat accounts of Mr. M Ashok Kumar, Mr. D Saravanan, Mr. D Murugan and Mr. D Kumar held jointly or individually. 22.5. The Registrar and Transfer Agents are also directed to ensure that till further directions the securities, including mutual fund units, held in the name of Right Target Advisory

Final Order in the matter of Right Target Advisory Services

Service are not transferred or redeemed. Further, Registrar and Transfer Agents are also directed to ensure that till further directions the securities, including mutual fund units, held in the name of Mr. M Ashok Kumar, Mr. D Saravanan, Mr. D Murugan and Mr. D Kumar, held jointly or individually, are not transferred or redeemed.” 10. The aforementioned Interim Order issued to the Noticees was also in the nature of a Show Cause Notice (hereinafter also referred to as “SCN”) whereby the Noticees were called upon to show cause as to why the investment advisory plans floated by them should not be held as "Investment Advisory Services" in terms of the IA Regulations, 2013 and thereby the activity of Right Target Advisory Service should not be treated as unregistered investment advisory activity under the SEBI Act and relevant Regulations. 11. In the said Interim Order, the Noticees were also directed to show cause as to why appropriate directions, under Sections 11, 11(4), 11B(1) and 11D of the SEBI Act and relevant SEBI Rules/Regulations should not be issued against them, including directions for imposing prohibition on buying, selling or otherwise dealing in the securities market, either directly or indirectly in any manner whatsoever for a particular period as well as not to be associated with any registered intermediary/listed entity in the securities market in any manner whatsoever, and also why any direction to refund the amounts so far collected from the investors/clients by offering such unregistered and unauthorized investment advisory services, should not be issued against them. 12. In this regard, the Noticees were provided with an opportunity to file their respective objections/replies if any, within 21 days from the date of the Interim Order and were also provided with an opportunity of personal hearing before SEBI, on a date and time to be fixed on a specific request to be made by them.

Final Order in the matter of Right Target Advisory Services

13. I note from the records available before me that the Interim Order was delivered to the Noticees at their respective addresses through Email as well as through SPAD, out of which, Noticee no. 1 confirmed receipt of the said Interim Order by way of an email dated December 15, 2020. I further note that the acknowledgement receipts of delivery of the said Interim Order to Noticees no. 2 to 5 are also available on record. 14. I note from the material available on record that Noticee no. 2, vide his email dated July 02, 2021, has submitted his reply to the allegations and prima-facie findings in the Interim Order and sought an opportunity of personal hearing. In the said reply Noticee no. 2 has contended that he had made no capital investment and there was no profit sharing involved in his favour in the said partnership. Further, he has stated to have retired from the partnership firm w.e.f. August 25, 2014. 15. I note that the rest of the Noticees did not make any submissions on merit. However, vide email dated July 07, 2021, Noticee no. 1 sought an opportunity of personal hearing. 16. Subsequently, in compliance with the principles of natural justice, an opportunity of personal hearing was granted to the Noticees on December 07, 2021, during which Noticees no. 2, 4 & 5 appeared in person through video conferencing. Noticee no. 2 reiterated his submissions made vide email dated July 02, 2021. Noticees no. 4 to 5 (also appearing on behalf of Noticees no. 1 and 3) were questioned about the submissions of Noticee no. 2 regarding his retirement from the firm w.e.f. August 25, 2014, which was confirmed by them. Further, the Noticees were given 10 days’ time to submit their comprehensive reply to the allegations and on the preliminary findings mentioned in the Interim Order along with supporting documents, if any, along with replies to the queries raised during the course of personal hearing.

Final Order in the matter of Right Target Advisory Services

17. Thereafter, vide email dated December 07, 2021, Noticee no. 2 made his submissions wherein he submitted a copy of Retirement Deed dated August 25, 2014. Further, Noticee no. 2 requested for lifting of the directions imposed vide Interim Order on him. 18. I note that, vide email dated December 17, 2021, Noticees no. 3 to 5 have submitted their respective replies to the Interim Order along with certain documents sought during the course of the hearing and submitted also expressing therein, their apology for entering into unregistered investment advisory services. 19. Subsequently, vide email dated January 07, 2022, Noticee no. 5 submitted a list of transactions claiming them to be gold loans from Bank of Baroda and City Union Bank. In support of his claim, he submitted three letters from City Union Bank attesting three transactions to be on account of gold loans taken by Noticee no. 5 from the said bank. Consideration of Issues and Submission 20. I have carefully perused the observations recorded in the Interim Order, the submissions made by the Noticees and other materials available on record. I note that it was prima-facie held in the Interim Order that the Noticees were providing Investment Advisory Services through the website in the name of Noticee no. 1 namely https://righttarget.in/. It was found in the preliminary examination that the said website was being used to collect funds from the investor clients and the amounts so collected as fees, were being deposited in five different accounts at different points of time, three of which were opened & held in the name of Noticee no. 1 and two accounts in the name of Noticee no. 5. In view of the aforesaid finding, it was prima-facie held in the Interim Order that the Noticees have violated the relevant provisions of IA Regulations, 2013 read with provisions of SEBI

Final Order in the matter of Right Target Advisory Services

Act. Those relevant provisions are being reproduced hereunder, for the benefit of ready reference: SEBI ACT, 1992 Registration of stock brokers, sub-brokers, share transfer agents, etc. 12. (1) “No stock broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act: SEBI (INVESTMENT ADVISER) REGULATIONS, 2013 Application for grant of certificate. 3. (1) On and from the commencement of these regulations, no person shall act as an investment adviser or hold itself out as an investment adviser unless he has obtained a certificate of registration from the Board under these regulations: 21. As stated earlier, SEBI had received a complaint dated June 13, 2019, against Noticee no. 1 alleging it to be involved in unauthorized Investment Advisory activities through its website i.e. https://righttarget.in/ which was found to be an active website at the time of passing of the Interim Order. It was observed that the Noticees were making certain irresponsible and outlandish claims about their investment advisory services and were enticing the investors to invest as per the investment advisory services rendered by them, by claiming 85-90% accuracy in the calls being given by Noticee no. 1 to its clients.

Final Order in the matter of Right Target Advisory Services

22. I also note that the Noticees have not refuted the aforesaid allegations during the whole proceedings and have admitted to having undertaken the business of Investment Advisory Service during the whole period of operation. Only Noticee no. 2 has submitted that he had retired from Noticee no. 1 w.e.f. August 25, 2014, which has been confirmed by Noticees no. 4 & 5 during the course of personal hearing as well as in their comprehensive post hearing submissions. 23. I note from the material available on record that Noticee no. 1 had five different bank accounts as publicized on the aforesaid website, details of which has been mentioned earlier in the present order. The funds were being deposited in the said five bank accounts either directly or through CC Avenue. I note from the materials available on record that the said CC Avenue account was also opened in the name of Noticee no. 1 and the agreement for the same was signed by the then partners viz. Noticees no. 2 to 4. A perusal of the said bank accounts show that the Noticees started receiving money in the said bank accounts from October 21, 2013, onwards and the last deposit received into the said accounts was on November 24, 2020. 24. Further, a perusal of the bank statement of the above noted five bank accounts, listed for purpose of receiving fees on the website of Noticee no. 1, reveals that there have been numerous deposits into the said accounts wherein, the figures of various amounts deposited match with different plan/package fees as have been highlighted in the abovementioned Table no. 1. An illustrative list of narrations supporting various credit entries in the account held with ICICI Bank Ltd. having A/c number 61XXXXXXXX21 is as under: Transaction Narration Credit Date (in INR) 04-03-2016 BIL/000928308139/subscription/NSP 7000

Final Order in the matter of Right Target Advisory Services

14-03-2016 BIL/000933740987/nifty/NSP 5500 28-03-2016 BIL/000939871451/nifty/NSP 5500 29-04-2016 BIL/000959185745/May2016Subscription/NSP 20000 The afore-cited narrations clearly establish that the funds being received in the said bank account were for the purpose of Investment Advisory services only. Further, during the course of the personal hearing, Noticees no. 3 to 5 have admitted to have accepted funds in the said five accounts for providing the said advisory services to their clients/subscribers. 25. I find that the name of none of the Noticees appears in the list of registered Investment Advisors available in the database maintained by SEBI. The same has not been disputed even by the Noticees either in their respective written submission or during the course of the personal hearing attended by them. 26. From the aforesaid narration of facts, the replies filed by the Noticees in response to the allegations made in the Interim Order and the submissions so advanced in the course of personal hearing, I find that the Noticees, acting through their partnership firm (arraigned at Noticee no. 1 in the present Order), were indeed engaged in rendering advice in an unauthorized manner relating to investing in, purchasing, selling or otherwise dealing in securities and in various other investment products of securities, as was proclaimed by the Noticees through their website viz. https://righttarget.in/. 27. At this juncture, it is pertinent to look at the definition of Investment Adviser (or short “IA”) as articulated in regulation 2(1)(m) of the IA Regulations, 2013 which states that Investment Adviser means “any person, who for consideration, is engaged in the business of providing investment advice to clients or other persons or group of persons and includes any person who holds out himself as an investment adviser, by whatever

Final Order in the matter of Right Target Advisory Services name called”. Further, I have perused regulation 2(1)(l) of the IA Regulations, 2013 which defines Investment Advice as “advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products, whether written, oral or through any other means of communication for the benefit of the client and shall include financial planning.” 28. In the light of the aforesaid definitions and the content published on the aforementioned website of the Noticees clearly describing Noticee no. 1 as ‘Stock Market Advisory Company’ read with the allegations imputed in the Interim Order, I note that the Noticees, through their website were offering investment advice as defined under regulation 2(1)(l) of the IA Regulations, 2013 by offering to give advice related to investing in, purchasing and selling of securities and were also offering various investment advisory service plans/packages to investors at large for subscription, which were nothing but purely in the nature of the services of investment advisory.

29. The Interim Order has recorded that the aforesaid investment advisory services were being offered by the Noticees in lieu of monetary considerations which were being paid by the concerned investors into the aforementioned five bank accounts, either by way of direct transfer or through CC Avenue platform, all of which were registered either in the name of Noticee no. 1 or Noticee no. 5. The details of these payment methods were also suggested to the public under the payment option section on the aforementioned website being run by them. 30. Further, the credit entries in the said five bank accounts are supported by narrations clearly indicating the specific investment plan subscribed by the said client with the deposit amounts which also matched with different payment plans as already highlighted in Table 1 above, thereby clearly demonstrating the fact that the monies that were received into the said bank Accounts were received by Final Order in the matter of Right Target Advisory Services way of proceeds from the business operations of the Noticees as Investment Adviser. Considering the fact that the website of the Noticees ostensibly demonstrated that the services offered by the Noticees were in the nature of investment advisory services, coupled with the fact that the aforesaid five bank accounts were specified in the website intimating the investors to deposit the fees into these accounts, it leads me to an unassailable conclusion that the said pay-in amounts as reflected in the said five bank accounts were in fact the amounts received towards consideration in lieu of the advisory services offered by the Noticees.

31. Considering the above factual analysis about the activities of the Noticees as proclaimed by them on their own website, the details of payment received by the Noticees from various investors, the bank statements of Noticee no. 1 (supported by the KYC records of the firm along with that of other Noticees), and most importantly, the fact that the Noticees have admitted to the charges/allegations levelled against them in the Interim Order in their respective written submission as well as during the course of hearing held on December 07, 2021, it constrains me to conclude that the activities indulged into by the Noticees squarely fall into the category of investment advisory services as defined under regulation 2(1)(l) of the IA Regulations, 2013. 32. In view of the aforesaid discussions and overwhelming factual findings pertaining to the advisory activities being undertaken by the Noticees during the relevant period, I have no doubt that in terms of Regulation 2(1)(l) of the IA regulations, 2013 such kind of advisory services rendered by the Noticees in fact constituted “investment advice” and the Noticees were providing investment advice through their partnership concern viz. Noticee no. 1, in lieu of consideration which was received and credited into the five bank accounts opened by them in the name of either Noticee no. 1 or Noticee no. 5. Therefore, there is no ambiguity left that the Final Order in the matter of Right Target Advisory Services

Noticees were engaged in the business of providing investment advice to the public, in lieu of monetary consideration and were thus, acting as an ‘investment advisers’, as defined under regulation 2(1)(m) of the IA Regulations, 2013. 33. In this regard, I find it necessary to deal with certain submissions made by Noticee no. 2 in his submissions dated July 02, 2021, which were again reinforced by his submissions dated December 07, 2021. Noticee no. 2 has firstly argued that he had retired from the said firm w.e.f. August 25, 2014, in support of which he has produced a deed of retirement. I note that the said fact has been affirmed by the other Noticees. 34. At this stage, I find it relevant to refer to Section 25 of the Partnership Act, 1932 which states that “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”. As noted in the preceding paragraphs, credit transactions in the bank accounts of the firm pertaining to rendering investment advisory services were observed during the period October 2013 to November 2020. In view of the same, the aforesaid partners of Noticee no. 1, are jointly and severally liable for the activities of the firm during their respective terms as partners which are found to be as following: Sl. No. Name of the Partner Tenure 1 Mr. M Ashok Kumar 10-03-2013 to 25-08-2014 2 Mr. D Saravanan 10-03-2013 to till date 3 Mr. D Murugan 10-03-2013 to till date 35. Another contention raised by Noticee no. 2 is that he was only a working partner with having no investment in the partnership firm and no profit sharing covenant in his favour. Effectively he was merely an employee receiving salary for his services. However, I am unable to accept the said contentions of Noticee no. 2 for the following reasons:

Final Order in the matter of Right Target Advisory Services

 firstly, there is no distinction available under Indian Partnership Act, 1932 between working partner and investing partner and all are equally liable for the acts of the firm under Section 25 reproduced above.  Secondly, clause 8 of the said partnership deed dated March 09, 2013 enumerates the profit sharing arrangement amongst the partners viz. Noticees no. 2 to 4 and, in the said arrangement, Noticee no. 2 was entitled to 20% of the profit earned by the firm in a financial year. 36. Another defense advanced by Noticee no. 2 has been that they had started offering investment advisory services prior to the coming into force of the IA Regulations, 2013 when there were no restrictions on carrying out such activities or any mandate to get registered with SEBI and they were not aware about the notification of the IA Regulations, 2013 and the mandate thereunder requiring investment advisers to get registered with SEBI. 37. It is a cardinal principle of law that ignorance of the law is no excuse and the same cannot be taken as a defense in any proceedings to avoid liability in case of breach.

The IA Regulations, 2013 were notified by SEBI in the year 2013 and it came into force w.e.f April 21, 2013, i.e. immediately after Noticee no. 1 came into existence. From such date, it was imperative for any person carrying out investment advisory activity to get registered with SEBI. The IA Regulations, 2013, as it stood when it was notified, had a transitionary provision enabling persons carrying on investment advisory activities prior to the notification of the IA Regulations, 2013, to seek registration with SEBI. The proviso to regulation 3(1) of IA Regulations, 2013, as it stood then, provided that such persons could continue to do investment advisory activity for a period of 6 months from the date of commencement of the IA Regulations, 2013 without obtaining SEBI Registration. It was further provided that in case such a person makes an Final Order in the matter of Right Target Advisory Services application for registration before SEBI within the said six months, then they could continue with the investment advisory activity till the application is disposed of by SEBI. In view of the fact that the firm was incorporated in March 2013 and it started receiving funds in its three accounts mentioned above only from October 21, 2013, I find no merit in the contention of the Noticees that they were engaged in investment advisory activities prior to the notification of the IA Regulations, 2013 which came into force from April 2013. If the Noticees had any intention of carrying on with the investment advisory activity after coming into force of the IA regulations, 2013 then it was obligatory on their part to seek registration from SEBI.

38. Therefore, the facts of the case don’t support the submission of Noticee no. 2 and it was imperative for all the Noticees to obtain registration as Investment Advisor under the IA Regulations, 2013 prior to starting their investment advisory services. However, I note that Noticee no. 2 admittedly continued providing tips/investment advice in an unauthorized manner through Noticee no. 1 during the period when he was a partner in the firm i.e. from October 2013 to August 2014. Subsequently also, Noticee no. 1 admittedly continued the unregistered Investment Advisory services supposedly through an employee (whose name was not disclosed by Noticees no. 3 to 5 despite giving undertaking to do so during the course of personal hearing) and thereafter, the advisory activities were continued by Noticee no. 5. It was only after the passing of the Interim Order that Noticee no. 1 stopped its operations as an unregistered investment advisor. In view of the same, I do not find any merit in the contentions advanced by Noticee no. 2. In fact, I find it important to mention here that it is not the case of Noticee no. 2 that after his retirement from Noticee no. 1, he altogether stopped the unregistered investment advisory services.

Rather, I find that Noticee no. 2 went on to open a sole proprietorship concern under the name ‘Profit Mount Advisory Services’

Final Order in the matter of Right Target Advisory Services and another partnership concern under the name ‘Always Gain Advisory Services’ to continue with the same business of rendering unregistered Investment Advisory services to the gullible clients. Both these entities have stopped their operations only in December 2020 when SEBI passed interim orders against them. Subsequently, both these entities have also appeared before me (through Noticee no. 2) for the purpose of final disposal of their respective proceedings and in the Orders passed by me, I have directed those two entities to refund investors’ money to their respective clients vide the said Final Orders dated December 22, 2021. 39. I find it necessary to highlight here the impunity with which the operations of Noticee no. 1 were being run by Noticees no. 3 to 5 without having any regard to the law of the land. As pointed out earlier, out of five bank accounts mentioned on the website of Noticee no. 1, two accounts were in the name of Noticee no. 5, although the name of Noticee no. 5 was not reflected in the partnership deed available with SEBI. Consequently, during the course of the personal hearing, a specific query was raised to Noticees no. 3 to 5 to clarify the status of Noticee no. 5 and to explain as to how his bank accounts were being displayed on the website of the firm. In this regard, from the post hearing submissions of Noticees no. 3 to 5, I find that Noticee no. 5 was never inducted in the firm as a partner, and yet his account details were not only shown on the website of Noticee no. 1 but also funds were continuously received in his bank accounts on behalf of the Noticee no. 1 from January 2018 to November 2020. Further, Noticees no. 3 to 5 have submitted that the investment advisory tips were actually being provided by one lady employee of the firm (name not disclosed by the Noticees despite specific query raised in this regard) and when she left, it was Noticee no. 5 who used to collect the investment tips from various websites and other places and forward them to the clients without doing any research on their end. It clearly shows how

Final Order in the matter of Right Target Advisory Services fraudulently and in such an irresponsible manner the Noticees were providing investment advisory services to their clients. It also shows how cleverly and for the reason best known to them, the Noticees have utilised the bank account of the Noticee no. 5 for receipt of fees from their clients against such illicit investment advisory services rendered to them without even inducting him (Noticee no. 5) either as a partner so as to hoodwink the clients and to ensure that the client/investors can not have any recourse against him under the law, in case of any wrongdoing by Noticee no. 5. 40. It is relevant to note here that in order to protect the interest of investors and to preserve the integrity of the securities market, the IA Regulations, 2013 provide various safeguards to ensure that the interests of the investors who receive investment advice are protected. One such safeguard provided under the said Regulations is that any person carrying out investment advisory activities has to obtain registration from SEBI as required under regulation 3(1) of the IA Regulations, 2013, which, inter alia, provides that, no person shall act as an investment adviser or hold itself out as an investment adviser unless he has obtained a certificate of registration from SEBI and also has to conduct its activities in accordance with the provisions of IA Regulations, 2013. Further, various crucial safeguards as provided under IA Regulations, 2013 include, continued minimum professional qualification and net-worth requirement for an investment adviser, disclosure of all conflicts of interest, prohibition on investment adviser entering into transactions on its own account which is contrary to the advice given by investment adviser to its clients for a period of 15 days from the day of such advice given, monetary risk profiling of investors, maintaining documented process for selecting investments for clients based on client’s investment objective and risk profile and understanding of the nature and risks of products or assets selected for such client, etc.

Final Order in the matter of Right Target Advisory Services

41. The activities of the Noticees, executed through their partnership concern viz. Noticee no. 1, as brought out from various materials described above including their aforementioned website, seen in the backdrop of the aforesaid regulatory provisions show that the Noticees were holding themselves out as an Investment Advisory service and through Noticee no. 1, other Noticees were holding themselves out as Investment Advisors too. However, it is noted that none of the Noticees was registered with SEBI as an Investment Advisor, which is mandatory under IA Regulations, 2013. Hence, I find that these activities/representations as made by the Noticees through their website and conduct vis-à-vis their clients without holding a certificate of registration as an investment adviser, is in violation of Section 12(1) of SEBI Act read with regulation 3(1) of the IA Regulations, 2013. 42. In order to ensure the protection of investors who receive investment advice, it is imperative that any person carrying out investment advisory activities should be competent enough to deal with investors’ monies and SEBI as a regulator, has made it necessary for anyone to conduct Investment Advisory service to first obtain registration after acquiring the relevant qualification, as prescribed by SEBI, and such person has to conduct his activities in accordance with the provisions of the relevant SEBI Regulations. 43. In my view, unregistered investment advisors like the Noticees in the present case, can put the interest of the common investors at great risk by misleading them or misutilising their funds to the detriment of the interest of such investors as well as others in the securities market. In the present case, the Noticees, on the aforementioned website have, inter alia, mentioned that M/s Right Target Advisory Services offered advices in stocks as well as for future and option (F&O) trading etc. The Noticees through the aforementioned website, have further represented that M/s. Right Target Advisory Services is a leading Indian Stock Market Advisory Company, having a strong hold in providing most

Final Order in the matter of Right Target Advisory Services authentic and accurate Stock Market Tips after huge analysis and research. It is also stated that the firm is ‘a professionally managed company’ with as high as 85- 95% accuracy in the calls generated by them. However, as mentioned above, the firm was managed in a completely unprofessional manner wherein all the time the advisory work was being done by completely incompetent/unqualified persons. As pointed out earlier, initially such unauthorized services were being rendered by Noticee no. 2 on whose retirement from the firm, it was delegated to an employee and then the said task was overtaken by Noticee no. 5 who even had no formal connection with the firm. Further, Noticee no. 5 was also not doing any research and was just collecting stock tips from numerous third party sources on a random basis and was forwarding those tips to the gullible investors. From the above, it is evident that the Noticees have knowingly engaged themselves into activities with the sole objective of fraudulently misleading the gullible investors to play with their hard earned money by making them follow their random stock tips which were provided to them by the Noticees, without any research or any effort.

In fact, they did so successfully conduct such unauthorized advisory activities for a quite long period of time until they were stopped by SEBI by virtue of Interim Order dated December 09, 2020. The website of Noticee no. 1 mentioned that they are a leading Indian Stock Market Advisory Company offering advices for trading in the futures and options segments of the securities market and their stock tips are based on detailed analysis and research. The Noticees also misrepresented to the investors by claiming that they have a stronghold in providing the most authentic tips which were based on research and analysis leading to more than 85% accuracies in their calls. 44. I find it important to mention here that unregistered investment advisory services are a menace to the securities market and SEBI has been fighting hard to curb this evil since long. In that direction, SEBI has enacted IA Regulations, 2013, and Final Order in the matter of Right Target Advisory Services has been conducting investment awareness seminars throughout the country to alert the public about such unregistered investment advisory activities.

Curbing this breed of unregistered investment advisors is a necessity to make the securities market more reliable for retail investors so that they get an opportunity to approach the persons who are qualified and eligible to give such kind of advisory services to them. Permitting the investors to receive an investment advisory service from an unregistered entity in effect, means that the same is received from an unqualified person without following the safeguards prescribed in the IA Regulations, 2013. An investor receiving a service from an unregistered investment advisor stands at a disadvantageous position vis-a-vis an investor who receives such service from a registered investment adviser with respect to his protection as an investor, as envisaged under the IA regulations, 2013. An unregistered investment adviser has not even satisfied the Regulator that he is a fit and proper person to hold the certificate of registration as an investment adviser. Availing of service from such persons is detrimental to investors and such unqualified service would result in irreparable damage, as the investors’ money is invested based on advices given by an unqualified and un-regulated advisor.

Exposing investors to such unauthorized and unregulated services also has the effect of interfering with the development of the securities market, as victims of such services as well as their close ones tend to lose faith in the securities market. Such an injury/detriment to the development of the securities market also qualifies as an “irreparable injury” not only to the said investor but to the securities market as a whole, as it deters the confidence of gullible small investors in the securities market. The objective of SEBI as enshrined in the SEBI Act is not only the protection of investors but also the orderly development of the securities market. Therefore, the investment advisory services should only be Final Order in the matter of Right Target Advisory Services allowed to be conducted by persons who are deemed fit under the IA Regulations, 2013 after following the safeguards mentioned therein. 45. I note that the materials available on record do not indicate the exact amount of fees collected by the Noticees, as a result of providing investment advice to investors, in violation of the provisions of the IA Regulations, 2013. However, I find from the Interim Order that the Noticees have received credits worth a total sum of INR 43.83 Lakhs (INR 43,83,290/-) through their five bank accounts enumerated above, either directly through account transfer of funds or through various other payment mediums such as CC Avenue, out of which three accounts belonged to Noticee no. 1 and two accounts belonged to Noticee no. 5. I also find that these five account numbers were published on the abovementioned website being run by the Noticees in order to enable the investors to make payment for availing the unauthorized investment advisory services offered by the Noticees.

46. In this regard, I find that Noticee no. 5 has contended that he had obtained jewels/gold loan from City Union Bank and Bank of Baroda in his accounts. A perusal of the two bank accounts of Noticee no. 5 shows that either the narration mentions obtaining of loan or the loan account number from which the amount has been raised, the details of which are as below: Transaction Narration Amount Date Credited Bank of Baroda Account No. 59XXXXXXXXXX89 09-01-2018 T05/578 65000 25-07-2018 05/1710 69500 08-11-2018 BY 05/2252 70000

Final Order in the matter of Right Target Advisory Services

City Union Bank Account No. 27XXXXXXXXXXX56 22-03-2019 BY TRANSFER: LOAN 502112024954315:00273 55000 29-03-2019 BY TRANSFER: LOAN 502112024955130:00273 69000 04-06-2019 BY TRANSFER: LOAN 502112024962196:00273 21000 Total 349500

I find it relevant to mention here that there were certain more transactions in the aforementioned City Union Bank account of Noticee no. 5 where narration suggested that these deposits were loan transactions. However, since the deposits prior to October 05, 2018, were not taken into consideration in calculating the amount collected from the investors, the said loan transactions prior to this date were not considered. Similarly, an amount of INR 74,000 was also claimed to be a jewel loan in Bank of Baroda Account. However, no such entry was found in the bank statement available on record. 47. Here I find it fair to exclude such amount of INR 3,49,500/- from the consideration of the other amounts that were collected by the Noticees by way of subscription to their Unauthorized Investment Advisory Services by various clients as the evidence on record suggest that the said amount was taken by Noticee no. 5 by way of a loan. Therefore, after excluding the abovementioned amount of INR 3,49,500, the amount collected by way of subscription to their Unauthorized Investment Advisory services aggregates to approx.

INR 40,33,790/-. 48. After holding that the Noticees were running an unauthorized Investment Advisory services through which they lured numerous gullible retail investors to subscribe to their service packages, who are the most vulnerable sections of the participants of the securities market, as the Regulator, it is an avowed duty of SEBI to protect the interest of such investors. As the Noticees have failed to Final Order in the matter of Right Target Advisory Services provide specific details of the funds collected by them in lien of their unauthorized investment advisory services which were credited into their five bank accounts, I take the entire amount of funds received by them through the said five bank accounts (sans the aforementioned loan amount of INR 3,49,500/- ), which amounts to INR 40,33,790/-, treating the same as the funds collected by them from their unauthorized Investment Advisory services only. The only method I find feasible to redeem the investors is to direct the Noticees to repay such funds collected from the investors. At this stage, I also clarify that Noticee no. 2 is liable for repayment of amounts by the firm collected in the three bank accounts of M/s Right Target Advisory Services at least upto August 25, 2014. ORDER 49. In view of the foregoing discussions and observations/findings about the activities engaged in by the Noticees in rendering investment advisory in an unauthorized and illegal manner, as has been established in facts & circumstances of the case, and in order to achieve the avowed object of SEBI Act, I, in exercise of the powers conferred upon me in terms Sections 11, 11(4),11B (1) and 11D, read with of Section 19 of the SEBI Act, while disposing of the allegations levelled in the Interim Order cum SCN hereby direct the following: 49.1.

The Noticees shall within a period of three months from the date of this Order, refund the money received from the clients/investors/complainant, as fees or consideration or in any other form, in respect of their unregistered investment advisory activities; 49.2. The Noticees shall issue a public notice in all editions of two National Dailies (one English and one Hindi) and in one local daily with wide circulation, detailing the modalities for refund, including the details of their contact

Final Order in the matter of Right Target Advisory Services person such as names, addresses and contact details, within 15 days of coming into force of this Order; 49.3. The repayments to the clients/investors shall be effected only through Bank Demand Draft or Pay Order or electronic fund transfer or through any other appropriate banking channels, which ensures audit trails to identify the beneficiaries of repayments; 49.4. The Noticees are prevented from selling their assets, properties and holding of mutual funds/shares/securities held by them in demat and physical form except for the sole purpose of making the refunds as directed above. Further, the banks are directed to allow debit only for the purpose of making refunds to the clients/investors who were availing the investment advisory services from the Noticees, as directed in this Order, from the bank account of the Noticees; wherein debit has been frozen by virtue of Interim Order dated December 09, 2020. 49.5. The Noticees shall resolve all the complaints pending against them and file a report of such resolution with SEBI addressed to the Division Chief, Investment Management Department, SEBI Bhavan, Plot No. C4 A, G Block, Bandra Kurla Complex, Bandra (East) Mumbai – 400051, within a period of 30 days from the date of this Order.

49.6. After completing the aforesaid repayments, the Noticees shall file a report of such completion with SEBI addressed to the Division Chief, Investment Management Department, SEBI Bhavan, Plot No. C4 A, G Block, Bandra Kurla Complex, Bandra (East) Mumbai – 400051, within a period of 15 days, after completion of three months from the coming into force of this Order, duly certified by an independent Chartered Accountant. The restraint on sale of assets in paragraph 49.4 shall cease to operate once the Final Order in the matter of Right Target Advisory Services refund to the investors is complete and the report as contemplated herein is filed; 49.7. The Noticees are debarred from accessing the securities market, directly or indirectly and is prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in any manner whatsoever, for a period of 06 (six) months from the date of this Order or till the expiry of 06 (six) months from the date of completion of refunds to investors as directed in paragraph 49.1 above, whichever is later; 49.8. The Noticees are also restrained from associating with any company whose securities are listed on a recognized stock exchange and any company which intends to raise money from the public, or any intermediary registered with SEBI in any capacity for a period of 06 (six) months from the date of this Order or till the expiry of 06 (six) months from the date of completion of refunds to investors as directed in paragraph 49.6 above, whichever is later; 49.9.

The Noticees shall not undertake, either during or after the expiry of the period of debarment/restraint as mentioned in paragraphs 49.7 and 49.8 above, either directly or indirectly, investment advisory services or any other activity in the securities market without obtaining a certificate of registration from SEBI as required under the Securities Laws; 49.10. The Noticees shall not divert any funds collected from investors, kept in bank account(s) and/or in their custody except for the purpose of refund as directed in paragraph 49.1 above; 49.11. The Noticees shall not dispose of or alienate any assets, whether movable or immovable, or any interest or investment or charge on any of such assets held in their name, including money lying in bank accounts except

Final Order in the matter of Right Target Advisory Services for the purpose of refund as directed in paragraph 49.1 and until the refund is completed and a report as mandated under paragraph 49.6 is filed with SEBI. 50. The direction for refund, as given in paragraph 49.1 above, does not preclude the clients/investors of Right Target Advisory Services from pursuing the other legal remedies available under any other law, against the Noticees for refund of money or deficiency in service before any appropriate forum of competent jurisdiction. 51. This Order shall come into force with immediate effect. 52. Obligation of the Noticees, in respect of settlement of securities, if any, purchased or sold in the cash segment of the recognized stock exchange(s), as existing on the date of this Order, can take place irrespective of the restraint/prohibition imposed by this Order, only in respect of pending unsettled transactions, if any. Further, all open positions, if any, of any of the Noticees in the F & O segment of the stock exchange, are permitted to be squared off, irrespective of the restraint/prohibition imposed by this Order. 53. A copy of this Order shall be served upon the Noticees, all the recognized Stock Exchanges, Depositories, registrar and transfer agents and Banks for necessary compliance with the above directions.

Sd/- DATE: March 28, 2022 S. K. MOHANTY PLACE: Mumbai WHOLE TIME MEMBER

Final Order in the matter of Right Target Advisory Services