Order In respect of Orange Rich Financials and its Proprietor, Mr. Saket Jalan

Under sections 11(1), 11(B) and 11(D) of the Securities and Exchange Board of India Act, 1992 read with Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 In respect of Orange Rich Financials and its Proprietor, Mr. Saket Jalan (PAN: ABSPJ5836A). Date of personal hearing: November 04, 2015 Appearance: Mr. SaketJalan, proprietor of Orange Rich Financials along with Mr. J. K. Sharma. For SEBI: Dr. AnithaAnoop, General Manager, Mr. T. Vinay Rajneesh, Assistant General Manager and Mr. N.S. Sheshashayee, Assistant General Manager.

1. Securities and Exchange Board of India (“SEBI”), vide an ex-parte interim Order dated July 08, 2015 (“interim order”) prima facie held that Orange Rich Financials, proprietor, Mr. Saket Jalan (“noticee”), was acting as an investment advisor without obtaining registration from SEBI to act as such and violated section 12(1) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) read with regulation 3(1) of the SEBI (Investment Advisers) Regulations, 2013 (“IA Regulations”).

2. In order to prevent the noticee from further misleading the investors and to prevent possible harm to investors caused by the unauthorized activities of the noticee, SEBI had, vide the interim order, issued the following directions:

“11. 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 Orange Rich Financials, Prop. Mr. SaketJalan (PAN: ABSPJ5836A):

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.”

3. The interim order was to be treated as a show cause notice and the noticee was advised to show cause as to why appropriate directions under the SEBI Act and relevant SEBI rules/regulations including directions prohibiting them from buying, selling or otherwise dealing in securities market and requiring the noticee to refund money collected as fees, charges or commissions or otherwise to the concerned clients with requisite interest, should not be taken against it. The noticee was advised to file reply and also indicate whether they wish to avail an opportunity of personal hearing in the matter.

4. The interim order was forwarded to the noticee vide SEBI letter dated July 08, 2015 and the same was delivered on the noticee. Thereafter, the noticee vide letter dated August 13, 2015 submitted the following:

(a) The noticee had shut down the business and ceased to act as an investment adviser or similar unregistered activities in the securities market.

(b) They have closed all the bank accounts held with Axis Bank, HDFC Bank, ICICI bank, Bank of India, Syndicate Bank and State Bank of India.

(c) The website of Orange Financials has been removed and all advertisements, publications, brochures, documents etc, in relation to the investment advisory has been withdrawn.

(d) They would not continue to act as investment adviser anymore.

5. The noticee was afforded an opportunity of personal hearing on November 04, 2015, when Mr. Saket Jalan, proprietor of Orange Rich Financials along with Mr. J. K. Sharma appeared and made oral submissions on the lines of the reply.

6. I have considered the interim order and the submissions of the noticee. I note that the interim order alleged that Orange Rich Financials, proprietor, Mr. SaketJalan acted as an investment advisor without obtaining registration from SEBI in violation of section 12(1) of the SEBI Act read with regulation 3(1) of the IA Regulations.

7. The noticee has not disputed the allegations and has stated that they shut down the business of acting as investment adviser and undertook that they would not undertake any unregistered activities in the securities market. The noticee has further stated that they have removed all advertisements, publications, brochures, documents etc, related to the investment advisory activities and that the website of Orange Financialsis not in operation.

8. I note the following observations made in the interim order:

(a) Orange Rich Financials, a proprietorship business of Mr. Saket Jalan. The same was registered on April 22, 2013under the Karnataka Shops and Commercial Establishment Act, 1961.

(b) The following were observed from the website of the noticee (www.orangerich.in):

• "About Us: Orange Financial is one of India's leading Advisory Company. ...with clear vision to equip with informed trades to enhance traders capital. It manages a well-rounded portfolio of products reaching to every individual Trader to meet varying their requirements. • Our Vision: To be an Organization to reach all traders for the stocks and commodity advisory services to enhance their money making skills through Trading and Investment. • Our Team: Consists of group of experienced technical analysts and highly professionals. • Our Goal: To provide the Best & Accurate Trading Calls on all Asset Classes." {Emphasis supplied}

(c) The noticee was found to be offering tips to the investors in respect of the following asset classes along with the statements made in its website – a. Equity: Under the said scheme, the noticee was offering tips for investment or trading in stock market. In its website, it was stated “we provide 3-4 normal calls and one premium call to subscribers. Traders get trading calls before markets open from the stock market experts". b. Commodity Trading:The noticee has mentioned in its website that "We offer 3-4 normal calls and one premium call in order to make investments into Gold and Silver contracts traded on MCX Market. We offer intraday calls having accuracy of 85-90%." c. Nifty Trading: The noticee has also stated “Nifty futures trading can provide new opportunities for managing the price risks inherent in volatile stock markets as well as profiting from expected price movements in these markets. Nifty covers more than 70% of traded values of stocks in NSE and also it covers around 60% of total market capitalization. We provide Daily 3-4 Nifty Calls with Proper targets.” d. Equity Trading: "This service in Stock Cash is designed for the traders who deal in NSE Stock Cash and Stock Futures.We provide maximum 3-4 calls per day with proper targets and Stop loss. We provide complete Support on Direct Mobile Number”.

(d) The noticee was also found to be providing subscription services as under: i. Special signature HNI Package with 5 benefits ii. Equity cash and equity futures iii. MCX normal Package iv. Profit sharing packages v. Nifty futures and options vi. MCX premium Package

The above subscription services were provided for periods ranging from one month to one year and the chargeslevied was in the range of Rs.15,000/- to Rs. 10,00,000/-. The details in respect of Special signature HNI package with 5 benefits is mentioned below:

Special Star Charges Net Profit Returns 1 month 2 lacs 10 lacs 3 month 3 lacs 15 lacs 6 month 5 lacs 25 lacs 1 Year 10 lacs 50 lacs and above (e) It was also observed that in order to receive the subscription amounts from investors who avail the services, the noticee had opened many bank accounts. It was noted that the noticee had opened bank accounts during September 2009 and October 2009 with Syndicate Bank and Axis Bank respectively. It had opened bank accounts with ICICI Bank Ltd. and HDFC Bank Ltd. in June 2010. The interim order, while considering the bank account opening dates and the date of registration under the Karnataka Shops and Commercial Establishment Act, 1961 has alleged that the noticee had commenced its operations even before it obtained the registration under the Karnataka Shops and Commercial Establishment Act, 1961, onApril 22, 2013.

(f) SEBI had analysed the bank statements of the noticee and observed that there were several deposits into the bank accounts from various parts of the country. Such deposits were found to be equivalent to the fees that was charged by the noticee from investors in lieu of providing them tips/investment advice. The interim order had observed “For instance, there are entries of credit, ranging between Rs. 500 to Rs. 1,00,000/-, by way of NEFT from Bangalore, Vasai, Surat, Bhopal, Calcutta, Kota, Firozabad, Kancheepuram, Rajkot, Delhi, Bikaner, Ahmadabad, Katwa, Sarangpur, Suratkal, etc. This indicates that Orange Financials is collecting funds from various parts of the country for their investment advisory services”. The interim order has also observed that the noticee was paying salaries to its employees from the payments received from investors. In this regard, it is noted that as per the registration certificate of establishment, the noticee has 9 employees.

(g) The interim order has also observed that the noticee continued with the investment advisory services despite the SEBI Investment Advisers Regulations having come into force.

9. I have noted the observations and note that the noticee was soliciting funds from investors/clients against providing tips for trading in the securities and commodities market. The noticee has received credit of fees from investors in its bank accounts. Investment tips were provided through telephone calls. The interim order also observed “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”.

10. The IA Regulations were notified on January 21, 2013 and came into force on the ninetieth day from the date of publication in the Official Gazette. In terms of regulation 2(1)(m) of the IA Regulations, an investment adviser is 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. Further, “investment advice”, under the IA Regulations, is defined as follows:

“investment advice” means 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: Provided that investment advice given through newspaper, magazines, any electronic or broadcasting or telecommunications medium, which is widely available to the public shall not be considered as investment advice for the purpose of these regulations;

Section 12(1) mandates that a person who desires to act as an ‘investment adviser’ shall do so in accordance with the conditions of registration obtained from SEBI. Further, regulation 3(1) of the IA Regulations stipulates as under:

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: 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.

The noticee admittedly does not possess a certificate of registration to carry on the activities as an investment adviser. The noticee is also not covered under the proviso to regulation 3(1). The interim order has provided details of receipt of money from investors/clients on various dates during 2010, 2011, 2013 and 2014. It is important to note that monies were received even after the IA Regulations came into force.

11. Considering the activities of the noticee as can be seen from his conduct, advertisement in its website soliciting subscription against receipt of investment advice in the securities market, receipt of payments from investors for receiving such tips from noticee, and most importantly the admission of the noticee that he had carried out investment advisory activities without registration from SEBI, I find that the noticee has contravened the provisions of section 12(1) of the SEBI Act and regulation 3(1) of the IA Regulations. The activities of the noticee cannot be said to qualify under any of the exemptions provided under regulation 4 of the IA Regulations.

12. In view of the above violations, the noticee becomes liable for enforcement action. The interim order has contemplated issuance of directions against the noticee including 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. It is an admitted fact that Mr. Saket Jalan is the proprietor ofOrange Rich Financials. Accordingly, directions only against the proprietorship concern would not serve the interest of justice and should include the proprietor also. Therefore, I am of the view that directions shall need to be passed against Orange Rich Financials as well as its proprietor Mr. Saket Jalan. Further, SEBI may investigate whether the noticee or its proprietor is carrying on similar activities in other names and take action appropriate action if found to do so.

13. In view of the foregoing, I, in exercise of the powers conferred upon me under section 19 of the SEBI Act and section 11(1), 11(4), 11B and 11D thereof read with the SEBI (Investment Advisers) Regulations, 2013, hereby issue the following directions:

a) M/s. Orange Rich Financials and its proprietor Mr. SaketJalanare hereby prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, in any manner whatsoever, for a period of 5 years.

b) M/s. Orange Rich Financials and its proprietor Mr. Saket Jalan shall not undertake, either directly or indirectly, investment advisory services or any activity in the securities market without obtaining a certificate of registration from SEBI as required under the securities laws.

c) M/s. Orange Rich Financials and its proprietor Mr. Saket Jalan shall expeditiously return the monies received from its clients, if any, in respect of its unregistered investment advisory activities as found in this Order and submit a certificate from a peer reviewed chartered accountant, within a period of 3 months from the date of this Order.

For the purpose of this Order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India ('ICAI').

14. SEBI may also initiate Adjudication proceedings under Chapter VIA of the SEBI Act against M/s. Orange Rich Financials and its proprietor Mr. Saket Jalan for the violation of indulging in unregistered investment advisory services in the securities market in breach of section 12(1) of the SEBI Act and regulation 3(1) of the SEBI (Investment Advisers) Regulations, 2013.

15. This Order shall come into force with immediate effect.

16. Copy of this Order shall be served on recognized stock exchanges and depositories for information and necessary action.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date: April 29th, 2016 Place: Mumbai