Order in respect of GoCapital and its Proprietor, Mr. Ankitkumar Shashikant Singhania

ORDER Under Sections 11 (1), 11B and 11D of the Securities and Exchange Board of India Act, 1992 read with read with Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 in respect of GoCapital and their Proprietor, Mr. Ankitkumar Shashikant Singhania (PAN: CTKPS0145K).

1. Securities and Exchange Board of India ("SEBI") received a complaint on January 22, 2015 alleging that the complainant incurred losses on the trades executed on the basis of tips received from GoCapital.

2. Thereafter, SEBI examined the website of GoCapital (www.gocapital.co.in). It was noted that GoCapital is offering investment advisory services such as tips for Stocks- Cash and F&O traded in NSE & BSE, commodities including bullions, metals commodities traded in MCX, etc. It was also observed that the entity was providing subscription services under various heads such as Equity, Derivative, Futures and Options and Nifty. It was further observed that in order to receive such subscription amounts, GoCapital has mentioned details of their bank account (Axis Bank, LBS Marg Branch, Mulund, Mumbai) in their website.

3. Thereafter, SEBI vide letter dated February 6, 2015 sought following details from GoCapital regarding services being provided by GoCapital:

a. Details of investment advisory services by GoCapital, b. List of all types of activities undertaken by GoCapital, c. Year wise details such as number of clients, total amount of money collected from the clients, total amount of fees collected from the clients in a tabular format since inception till date, d. List of clients as on date and minimum amount accepted from such clients, if any, for managing their portfolio, e. Details of fees charged for various services offered, f. Registered/corporate/correspondence addresses of GoCapital along with contact numbers and email addresses, g. Certificate of incorporation, h. Name, address, phone numbers, PAN numbers of all promoters/directors/key managerial personnel of GoCapital, i. A copy of the agreement entered with clients, j. A copy of audited annual accounts for last three financial years.

3.1 The aforesaid letter was returned as undelivered. Another letter dated February 18, 2015 was sent to the same address. However, the said letter was also returned undelivered.

3.2 Based on the details of GoCapital's bank account with Axis Bank, LBS Marg Mulund Branch, Mumbai (Account No. 913020010971317) available on its website, SEBI vide letters dated March 9, 2015, April 1, 2015 and July 8, 2015 sought the following information from Axis Bank:

 Details of bank account maintained by GoCapital with Axis Bank  Name and PAN of authorized signatories  Bank account statement for the last six months,  Address of the entity.

3.3 Vide letters dated March 17, 2015, April 13, 2015 and July 11, 2015, Axis Bank provided the following information:  Details of bank account maintained by GoCapital with Axis Bank,  Copy of Account Opening form filed by GoCapital,  Bank account statements for the period December 1, 2012 to February 22, 2013 of the Prop. Mr. Ankitkumar Shashikant Singhania,  Bank account statements for the period January 1, 2015 to July 10, 2015 of GoCapital.

3.4 SEBI made several attempts to contact GoCapital by sending letters (dated April 28, 2015, June 24, 2015 and June 25, 2015) to the addresses provided by Axis bank and also through emails (singhaniaadvisory@gmail.com and singhania.1762@gmail.com) as mentioned in their bank records.

3.5 GoCapital, vide letter dated July 14, 2015 and via email dated July 15, 2015, replied stating that their address had changed and therefore it did not get any of the physical letters sent by SEBI. GoCapital further sought extension of time for submission of reply for 15 days. SEBI, accordingly advised GoCapital to submit their reply latest before July 31, 2015.

3.6 Subsequently, GoCapital vide email dated July 31, 2015 sought for further extension of time. GoCapital was then advised to provide their reply latest by August 14, 2015 and was also informed that no further request for extension shall be entertained.

3.7 GoCapital, vide their email dated August 20, 2015 requested SEBI to grant an opportunity for personal hearing to put across their stand on the issue and provide the requisite information to SEBI.

3.8 In response, SEBI vide email dated August 25, 2015 clarified that personal hearing was not possible at this stage and that the requisite information needs to be provided without any further delay. GoCapital was further advised to provide their reply to the issues raised in the letters sent by SEBI latest by August 31, 2015.

4. No reply was received from GoCapital within the prescribed time inspite of being afforded several opportunities for submission of information. In view of this, I am constrained to proceed on the basis of the material available on record such as the information available from the website of the entity, information/documents obtained from Axis bank, LBS Marg branch, complaints received against GoCapital and the documents contained therein, etc. The issue for determination in the instant matter is that whether GoCapital is providing Investment Advisory Services to their clients/investors, without obtaining registration from SEBI, in violation of the provisions of SEBI Act, 1992 and SEBI (Investment Advisers) Regulations, 2013 (hereinafter referred to as "SEBI Investment Advisers Regulations").

4.1 On an examination of the aforementioned material/information available on record, it is prima facie observed that:

i. GoCapital is a proprietorship business of Mr. Ankitkumar Shashikant Singhania (PAN: CTKPS0145K). The office address of the entity (as provided by the complainant) is GoCapital Division, Tulsi Chambers, Office No. A/203, Nariman Point, Mumbai- 400021. The address of the entity mentioned in their letterhead is Office No. 10, Ground Floor, Hari Om, Puja Apts, M.P. road, Wada, Dombivali (W)- 421202.

ii. From the website of GoCapital, following are observed:  "GoCapital Services is an Investment Advisory Company which provides safe recommendations for your valued Investments in the Stock Market. We provide the Best Share Tips. We recommend for Stocks- Cash and F&O traded in NSE & BSE, commodities including bullions, metals commodities traded in MCX."  Our Mission: ..to provide practical and educational resources which will encourage everyone to be proactive regarding their financial needs and situations...we assure our customer more than 85% accuracy in our recommendations on stock market.

 Our Motto: to provide people with opportunities to make fast money with minimum risk in a short period of time.  Our services: i. Intraday equity ii. Futures & Options iii. BTST-STBT iv. NIFTY iii. The fees for the aforesaid services ranging from Rs.20,000/- to Rs. 35,000/- are levied on monthly basis. One such package, as given in the website is reproduced as under:

"Intraday Equity 1. Get 1 – 2 ideas daily. 2. Minimum 1,000 to 3,000 Quantity. 3. Get 6,000 to 10,000 profits in each call. 4. Cost of Package Rs 20,000 for 1 month. Sales tax of 12.36% extra."

iv. It is also observed that in order to receive such subscription amounts, GoCapital has given the details of their bank account in their website. Following are the details of the said bank account:

"Payment: Make payment directly to our bank Account Name: GoCapital Bank : Axis bank, Branch Address: LBS Marg Branch, Mulund, Mumbai-400080"

v. On perusal of the details of the bank statements and other related documents of the entity obtained by SEBI from Axis Bank, LBS Marg, Mulund, Mumbai, it is seen that GoCapital has opened the Bank Account on February 26, 2013 with Axis Bank. On perusal of the bank account statements of GoCapital for the period between January 01, 2015 and July 10, 2015, it is observed that it contains several credit entries which mentions "investment tips. investment advice, profit sharing" etc.

vi. From the above details available on the website, it is observed as under: a. GoCapital is providing investment advisory services to clients for consideration. b. Tips are being provided to the investors through calls. c. The clients can register for free trial and if the clients find the free trial satisfactory then they can register with the entity as regular client choosing any of the services mentioned on the website of the entity.

5. In the light of the above analysis and examination, it is evident that the activities of GoCapital of giving trading tips, stock specific recommendations, etc. to the investors clearly indicate that they are engaged in providing "investment advisory services" to investors on payment of fees as discussed in the preceding paragraphs, which prima facie fall under the definition of "investment adviser" as defined by Regulation 2(m) of the SEBI Investment Advisers Regulations, which reads as under:

"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 name called;"

6. In order to protect the interest of investors and to ensure that no investors are defrauded, it is imperative that any entity carrying out the activities of a market intermediary activities has to necessarily obtain registration from SEBI and conduct its activities in accordance with the provisions of SEBI Act and SEBI (Investment Advisers) Regulations, 2013. Section 12(1) the SEBI Act reads as under:

'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.'

7. Further, as per Regulation 3(1) of the SEBI Investment Advisers Regulations, the registration of the investment advisers is mandatory, it provides that, "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: Provided that a person acting as an investment adviser immediately before the commencement of these regulations may continue to do so for a period of six months from such commencement or, if it has made an application for a certificate under sub regulation (2) within the said period of six months, till the disposal of such application."

8. In this context, it is noted that GoCapital and their proprietor, Mr. Ankitkumar Shashikant Singhania, are not registered with SEBI in any capacity and the characteristics and features of the business activity carried out by GoCapital and Mr. AnkitKumar Shashikant Singhania as discussed in the preceding paragraphs prima facie leads to the conclusion that GoCapital and Mr. AnkitKumar Shashikant Singhania are providing services of investment adviser.

9. Considering the facts and circumstances of the matter, I am convinced that the activities of GoCapital and their Proprietor Mr. AnkitKumar Shashikant Singhania of giving trading tips, stock specific recommendations, etc. to the investors on payment of fees falls within the definition of activities of “investment adviser” as defined under Regulation 2(m) of the SEBI Investment Advisers Regulations. GoCapital is prima facie engaged in providing investment advisory services to clients for consideration without registration with SEBI, and as a result of the aforesaid activity has violated Section 12(1) of SEBI Act, 1992 read with Regulation 3(1) of SEBI Investment Advisers Regulations.

10. SEBI (Investment Advisers) Regulations, 2013 inter alia provide the framework for regulating the activity of entities who are in the business of providing investment advice in respect of securities and investment products. The Regulations seek to create a standardized operating structure within which investment advisers will operate and also make them duly accountable for their investment advice by requiring investment advisers to comply with the criteria set out in the relevant provisions of the SEBI Investment Advisers Regulations, such as having the prescribed professional qualifications, certifications from competent authorities, conforming to fit and proper criteria, satisfying capital adequacy requirement, adequate infrastructure facilities, etc. In view of this, subjecting the investment advisers to the statutory requirement of registration with SEBI is imperative for the protection of interests of investors and to safeguard the integrity of securities market. In the instant case, GoCapital and their Prop. and Mr. AnkitKumar Shashikant Singhania have solicited and induced investors to deal in securities on the basis of their investment advices, stock trade tips, etc. guaranteeing returns on their website. In view of this, it is apprehended that investors at large could be misled on account of such unauthorized activities of such unregistered entities.

11. SEBI has been entrusted with the duty to protect the interests of investors and protect the integrity of the securities market. Considering the facts and circumstances of the present matter and on the basis of prima facie findings, it is necessary to intervene in this matter to take immediate steps to prevent such persons from further misleading investors. I am convinced that this is also a case where, effective and expeditious action is required to be taken to prevent any possible harm to investors caused by the unauthorized activities of GoCapital.

12. In view of the above, I, in exercise of the powers conferred upon me by virtue of Section 19 read with sections 11(1), 11B and 11D of the SEBI Act, by way of this ad-interim ex-parte order direct GoCapital and their Proprietor, Mr. Ankitkumar Shashikant Singhania (PAN: CTKPS0145K), a. to cease and desist from acting as investment advisers and cease to solicit or undertake such activities or any other unregistered activity in the securities market, directly or indirectly, in any manner whatsoever;

b. to 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.

c. furnish all the information sought by SEBI, vide letters dated February 6, 2015, April 28, 2015, June 24, 2015 and June 25, 2015.

13. The above order is without prejudice to the right of SEBI to take any other action that may be initiated against GoCapital and their Proprietor, Mr. Ankitkumar Shashikant Singhania, in accordance with law.

14. This Order shall be treated as a show cause notice and GoCapital and their Proprietor, Mr.Ankitkumar Shashikant Singhania may show cause as to why appropriate directions, under the SEBI Act, 1992 and relevant SEBI Rules/Regulations including directions, prohibiting them from buying, selling or otherwise dealing in securities market, and requiring the investment adviser to refund any money collected as fees, charges or commissions or otherwise to the concerned clients along with the requisite interest, should not be taken against them.

15. The prima facie observations contained in this Order are made on the basis of the material available on record such as details from the website of GoCapital and the details/documents provided by Axis Bank. GoCapital and their Proprietor, Mr. Ankitkumar Shashikant Singhania may file their objections, if any, within twenty one days from the date of this Order and if the entity so desire, may avail an opportunity of personal hearing before SEBI at its Head Office at SEBI Bhavan, C4-A, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051 on a date and time to be fixed on a specific request, to be received in this behalf from the entities/persons.

16. This order shall come into force with immediate effect and the directions issued hereinabove shall continue till further orders.

Place: Mumbai S. RAMAN Date: December 30, 2015 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA