Order in the matter of M/s Capital True Financial Services against Narendra Singh Tanwar, Proprietor of M/s Capital True Financial Services

Under Sections 11(1), 11(4), 11B and 11D of the Securities and Exchange Board of India Act, 1992 In Re: Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 In respect of: S. No. Name of the Entity PAN 1 Narendra Singh Tanwar, Proprietor of M/s AINPT0227B Capital True Financial Services

In the matter of M/s Capital True Financial Services

BACKGROUND 1. Securities and Exchange Board of India (“SEBI”) received a complaint against Mr. Narendra Singh Tanwar, Proprietor of M/s Capital True Financial Services (hereinafter referred to as “Noticee”) on August 14, 2018. The said complaint was forwarded to the Noticee in SCORES for resolution and submission of ATR to SEBI. The complainant has alleged that the Noticee had promised him lucrative returns on an investment of ` 20,000/- to the tune of ` 28.80 lakh over a period of 4 months and 10 days and would charge service fee of ` 4,47,200/- in installments. The complainant had transferred ` 1,30,000/- as the first installment towards the fee. However, when the complainant suffered loss on the first day, he requested the person who was representing the Noticee to return his money. The said person refused to return the money and also had stopped receiving complainant’s calls.

2. While examining the aforesaid complaint, the registration obtained by the Noticee as an Investment Adviser (hereinafter referred to as “IA”) from SEBI was also examined. It prima facie appeared that the Noticee had taken the registration as an IA from SEBI by submitting false documents. SEBI’s EXAMINATION 3. On an examination of material available on record, it was observed that the Noticee holds a degree in Bachelor of Science (Hons.) from Devi Ahilya University, Indore. The Noticee at the time of obtaining registration from SEBI had also submitted experience certificate of Kantilal Chhaganlal Securities Pvt. Ltd. (Stock Broker bearing SEBI Reg. No. INB230930138) (herein after referred to as “Stock Broker”) signed by Mr. Mukesh Kumar Banglewala (sub-broker of Kantilal Chhaganlal Securities Pvt. Ltd. bearing SEBI Reg. No. INS238480219), wherein it was certified that the applicant had worked as a Portfolio Management Advisor from January 24, 2009 to June 11, 2014 with the Stock Broker. The applicant had also submitted his offer letter and pay slip in support of the said experience certificate.

4. As a matter of preliminary enquiry, SEBI, vide an email dated September 13, 2018, advised the Compliance Officer of the Stock Broker., Mr. Ajay Shah to offer his comments on the authenticity of the experience certificate, offer letter and pay slip submitted by the Noticee to SEBI.

5. In response to SEBI’s email, the Compliance Officer of the Stock Broker vide his emails dated September 17, 2018 and September 18, 2018 submitted as follows: a. That the documents submitted by the Noticee are not authentic. b. As regards the offer letter and pay slip, the Compliance Officer stated that the Noticee is not an employee of their company and that the offer letter and pay slip have not been issued by the Stock Broker.

Interim Order in the matter of M/s Capital True Financial Services c. As regards the experience letter, the Compliance Officer stated that they have sent an email to Mr. Mukesh Banglewala on September 18, 2018 to offer his comments on the same.

6. Thereafter, Mr. Mukesh Banglewala vide his email dated September 18, 2018 to the Compliance Officer of the Stock Broker submitted as follows: a. The signature in the experience certificate is not his signature. b. He does not know the Noticee and that his name and signature have been misused by the Noticee.

7. The Compliance Officer of the Stock Broker in his email dated September 18, 2018 had attached the aforesaid reply of Mr. Mukesh Banglewala and had stated that the same is self-explanatory. CONSIDERATION

8. On an examination of the material / information available on record, it is prima facie observed that : i. Mr. Narendra Singh Tanwar (PAN: AINPT0227B) is the proprietor of M/s Capital True Financial Services. The registered office of M/s Capital True Financial Services is 174, in front of Lasudiya Police Station, Savinay Bal Mandir School, Lasudiya Mori, Indore, Madhya Pradesh.

ii. The complaint received by SEBI claims that the Noticee had promised a lucrative return to the complainant by investing his money in the securities market over a short period of time (4 months) for a large fee.

iii. From the website of M/s Capital True Financial Services, www.capitaltrue.com, following are observed to have been stated:

 Capital True Financial Service is a pioneering financial advisory firm having a team of specialized financial market analysts having massive experience in carrying out capital market research. We deliver reliable tips and advices for stocks, future and option (F&O) traded in the NSE and BSE, commodities such as bullion, agri and metals traded in the MCX and NCDEX. We offer daily and weekly reports having stock and commodity market overview that assists the investors to identify with the trends of the market and assists in taking smart decisions. We provide the recommendation on technical basis by keeping eyes on fundamentals with appropriate risk & reward ratio. We always keep transparency in our services & make realistic commitment to our clients. We provide recommendations to our clients through SMS and Voice. Our SMS facility is a very efficient system ensuring the instant delivery of Message without any loss of time. So, the clients get adequate time to enter into the trade and fetch the maximum profit.  It is providing services in various categories viz., Equity Service, NCDEX Service, MCX/Commodities Service, HNI Service, Premium Service and Rocking Service  It has also mentioned a pricing schedule for its services with its monthly, quarterly, half yearly and yearly rates for the aforementioned services. One such instance is reproduced below: o HNI Equity- HNI Equity is planned for the traders who trade in HNI Equity. We provide Intraday Calls in HNI Equity segment. Capital True Financial Services Provided to HNI Equity tips based on Technical and Fundamental Analysis. Our research team will help you to make good returns. In this service we provide intraday calls on Stock Futures. o 2-3 HNI Equity intraday calls. o We provide HNI Equity only via sms.

o Follow stop loss strictly on each & every calls. o Follow-ups and Market News Updates. o Support on Yahoo & Direct Mobile Number will be provided. HNI Equity Monthly 30,000/- Pay Now Quarterly 80000/- Pay Now Half 140000/- Pay Now Yearly Yearly 250000/- Pay Now  In order to receive such subscription amounts, the details of bank account maintained with State Bank of India, Axis Bank Ltd., HDFC Bank Ltd. and ICICI Bank Ltd., are made available on the website. For instance : o State Bank of India- A/c Name: Capital True Financial Services - Account No. – 37340284796 - Account Type – Current - IFSC Code – SBIN0030450 - Branch Address - Indore

Apart from the above, payment through PAYTM and PayU money can also be done. iv. From the above details available on the website, it is observed as under:  The Noticee is providing investment advisory services to clients for consideration.  Tips are being provided to the investors through calls and SMS.  The clients can avail the various services offered by the Noticee in the securities market and commodities market by subscribing for a consideration to any of the services mentioned on the website of the Noticee.

9. In the light of the above analysis and examination, it is, prima facie, evident that the Noticee is engaged in providing “investment advisory services” to investors on payment of fees as discussed in the preceding paragraphs, which prima facie falls under the definition of “investment adviser” as defined by Regulation 2(m) of the SEBI Investment Advisers Regulations, 2013 (hereinafter referred to as “IA 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;”. 10. I, further note that for the purpose of grant of certificate of IA, the applicants have to satisfy the eligibility laid down under Regulations 6 and 7 of IA Regulations. The relevant provisions in the extant matter are Regulation 6 (b) read with Regulation 7(1) (b) of the IA Regulations. The same are reproduced below:

Consideration of application and eligibility criteria. 6. For the purpose of the grant of certificate the Board shall take into account all matters which are relevant to the grant of certificate of registration and in particular the following, namely, — (a)… (b) whether in case the applicant is an individual, he is appropriately qualified and certified as specified in regulation 7 Qualification and certification requirement. 7.(1) An individual registered as an investment adviser under these regulations and partners and representatives of an investment adviser registered under these regulations offering investment advice shall have the following minimum qualifications, at all times: (a)…. (b) A graduate in any discipline with an experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio Management.

11. The Noticee had obtained a registration certificate from SEBI to act as an IA by producing an experience certificate which showed that he was working as a Portfolio Management Advisor with the Stock Broker for the period between January 24, 2009 to June 11, 2014. However, when the veracity of the said experience certificate was scrutinized by questioning the signatory of the said certificate, it turned out to be prima facie not genuine / forged / fabricated. The signatory, Mr. Mukesh Banglewala also denied knowing the Noticee.

12. In view of the above, it is prima facie held that the Noticee, by submitting false documents has obtained registration from SEBI as an IA and has prima facie violated his conditions of certificate and the ensuing provisions of Regulation 13 (a) of IA Regulations. The same is reproduced below: Conditions of certificate. 13. The certificate granted under regulation 9 shall, inter alia, be subject to the following conditions:- (a) the investment adviser shall abide by the provisions of the Act and these regulations;

13. Since the Noticee has prima facie failed to satisfy the conditions of his certificate of registration as an IA, it is prima facie held that the Noticee has violated Regulations 6(b) read with 7(1)(b) and Regulation 13 (a) of IA Regulations. 14. IA Regulations 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 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 IA Regulations. In view of this, requiring the investment advisers to have certain minimum qualifications indicating their competence and proficiency in the field of finance is imperative for the protection of interests of investors and to safeguard the integrity of the securities market. In the instant case, the Noticee is soliciting and inducing the investors to deal in securities market on the basis of his investments advice, stock tips etc. prima facie without having the requisite qualifications as mandated under IA Regulations. In view of this, it is apprehended that investors at large could be misled on account of the advice given by the Noticee as prima facie he lacks knowledge and experience in financial products.

15. SEBI has a statutory duty to protect the interests of investors in securities and promote the development of, and to regulate, the securities market. Section 11 of the SEBI Act has empowered it to take such measures as it thinks fit for fulfilling its legislative mandate. IA Regulations has been formulated with the main objective of regulating the activities of investment adviser so as to safeguard the interests of investors and hence the requirements / conditions laid down therein have to be mandatorily followed.

16. 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 the Noticee from further misleading investors on false pretense. I am convinced that this is also a case where, effective and expeditious action is required to be taken to prevent any further harm to investors caused by the investment advice given by the Noticee. In light of the same, I find that there is no other alternative but to take recourse through an ad interim ex-parte order against the Noticee for preventing him from collecting fees and indulging in investment advisory activities.

ORDER 17. In view of the above, I, in exercise of the powers conferred upon me by virtue of Section 19 read with Sections 11(1), 11 (4) (b), 11B and 11D of the SEBI Act, hereby issue the following directions by way of this ex-parte ad-interim order directing Mr.

Narendra Singh Tanwar, proprietor of M/s Capital True Financial Services (PAN: AINPT0227B) to:- a. to cease and desist from acting as investment advisor and cease to solicit or undertake such activities or any other unregistered activity in the securities market, directly or indirectly, in any manner whatsoever until further orders; b. to immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, websites, communications etc. in relation to their investment advisory or any activity in the securities market until further orders; c. to submit a list of his clients and fee collected from them to SEBI within 21days from this order; d. not to divert any funds raised from investors, kept in bank account(s) and/or in his custody until further orders. 18. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against Mr. Narendra Singh Tanwar, proprietor of M/s Capital True Financial Services in accordance with law. 19. This Order shall be treated as a show cause notice and Mr. Narendra Singh Tanwar, proprietor of M/s Capital True Financial Services may show cause as to why appropriate directions, under Sections 11 and 11B of the SEBI Act and IA Regulations including directions, prohibiting him from buying, selling or otherwise dealing in securities market, either directly or indirectly, in any manner whatsoever, for a particular period and to refund the amount collected from the investors/clients, should not be issued against him.

20. The prima facie observations contained in this Order are made on the basis of the material available on record. In this context, Mr. Narendra Singh Tanwar, may, within 21 days from the date of receipt of this Order, file his reply, if any, to this Order and may also indicate whether they desire to avail an opportunity of personal hearing on a date and time to be fixed on a specific request to be made in that regard.

21. The above directions shall take effect immediately and shall be in force until further orders.

DATE: November 6, 2018 MADHABI PURI BUCH PLACE: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

Interim Order in the matter of M/s Capital True Financial Services