Order in the matter of Unique Vision Financial Advisory Pvt. Limited

WTM/PS/22/IMD/DoF-I/JULY/2015 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under Sections 11(1), 11(4), 11B and 11D of the Securities and Exchange Board of India Act, 1992 In the matter of Unique Vision Financial Advisory Pvt. Limited In respect of Unique Vision Financial Advisory Pvt. Limited, Mr. Chandrakant Shamrao Dhole and Mr. Ravindra Shankar Kaurav Date of Hearing: April 17, 2015 Appearance: Mr. Chandrakant Shamrao Dhole and Mr. Ravindra Shankar Kaurav. For SEBI: Ms. Anitha Anoop, Deputy General Manager, Mr. Pradeep Kumar, Assistant General Manager, Ms. Amruta S. Naik, Assistant Manager. 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI'), issued an ex-parte interim order dated January 29, 2015 (hereinafter referred to as 'the interim order') against one Unique Vision Financial Advisory Pvt. Limited (hereinafter referred to as 'Unique'/ 'the Company') and its promoters/ directors namely Mr. Chandrakant Shamrao Dhole and Mr. Ravindra Shankar Kaurav (hereinafter collectively referred to as 'noticees'), pursuant to a preliminary enquiry into its business activities. The interim order observed that Unique was offering portfolio management services to its clients without obtaining registration from SEBI as portfolio manager in contravention of Section 12(1) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') read with SEBI (Portfolio Managers) Regulations, 1993 (hereinafter referred to as 'PMS Regulations').

2. In order to protect the interests of investors in securities and to prevent Unique from soliciting and collecting funds from the investors and carrying on portfolio management services without due registration from SEBI, the interim order issued the following directions against the noticees:

"9. ... i. to cease and desist from acting as a portfolio manager, ii. not to solicit or undertake anymore such activity or any other unregistered activities in the securities market, directly or indirectly, in any manner whatsoever, iii. not to divert any funds raised from any of its existing clients/investors. 10. The above directions shall take effect immediately and shall be in force until further orders. It is clarified that the prohibition on Unique Vision and its aforementioned promoters/directors shall not prevent them from making payments to the existing clients, if any, in accordance with the terms of the contracts already executed by them. 11. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against Unique Vision and its promoters/directors in accordance with law." The interim order advised the noticees that they may file their replies within 21 days from the date of receipt of the order and also to seek an opportunity of personal hearing.

3. Mr. Chandrakant Shamrao Dhole vide his letters dated February 17, 2015 and March 05, 2015 replied to the interim order and requested for date of personal hearing after March 15, 2015. The submissions in brief are as under:

a. The money was collected from the close friends, friend's friend and relatives.

b. The money so collected was used in the 'stock market' and 'international forex market'. In due course, he incurred losses which were not shared with other noticee namely Mr. Ravindra Shankar Kaurav.

c. In order to cover up such losses he started collecting money from the investors and invested the same in stock market, however, this time again he incurred losses.

d. Thereafter, he started rotating the money of the investors. When the flow of money had stopped from the investors, the Company was closed.

e. He had not purchased any property/ made any fixed deposit out of the funds of the investors.

While submitting the above, the noticee apologised for the mistake and submitted that he can earn and return all the monies of the investors.

4. Before proceeding further with the matter, an opportunity of personal hearing was afforded to the noticees on April 17, 2015, when the noticees namely Mr. Chandrakant Shamrao Dhole and Mr. Ravindra Shankar Kaurav appeared for themselves and for the Company and reiterated the submissions made in the reply. The noticees also submitted a 'compact disc' containing the details of the bank accounts of the Company. The noticees also requested for one week's time for submitting the written submissions which was duly granted. The noticees vide email dated April 24, 2015, requested for an extension till May 05, 2015, for submitting the written submissions and the bank statements. Vide another email dated May 09, 2015, the noticees requested for further extension till May 18, 2015. The noticees namely Mr. Chandrakant Shamrao Dhole vide his letter dated May 19, 2015, submitted that he had collected ₹1,84,60,000 from the investors and had returned ₹1,35,87,636 to investors in the form of monthly return. The noticee also requested SEBI to consider the said payment as a payment of principle amount collected from the investors and agreed to pay the remaining amount i.e. ₹48,72,364 to the investors, for which he requested for additional time. Along with this letter he also filed the bank statements of the Company with ICICI Bank and IDBI Bank. As the details provided by the noticee were not clear, SEBI vide email dated June 08, 2015, sought certain additional details i.e.

- details in respect of amount returned to the investors through bank (including name of the investor, amount, date of payment, NEFT transaction number, etc.) and - details in respect of amount returned to the investors through cash (including acknowledgement/ receipt/ confirmation from the investors)

The noticees namely Mr. Chandrakant Shamrao Dhole vide his letter dated June 11, 2015 submitted the details of amount returned to the investors through bank and in cash. However, the details submitted for cash payments, were not supported by any acknowledgement/ receipt/ confirmation from the investors.

5. I have considered the interim order, the submissions made by the noticee, the documents provided by them and other material available on record. The following are the important observations made in the interim order:

a. Unique was incorporated on September 26, 2011. The registered office of the company is situated at "Survey No. 48/3, C/4, Heavan Park, Mohammad Wadi, Hadapsar, Pune- 411028". Its Directors are Mr. Chandrakant Shamrao Dhole (who holds 81% of the shares of the Company) and Mr. Ravindra Shankar Kaurav (holds 19% of shares of the shares of the Company).

b. As per MoA, the main objects of Unique inter alia are, "To carry on the business as financial advisors, management advisor and provide advice in various fields, general administrative, secretarial, commercial, financial.......".

c. The Company had offered two schemes, viz. scheme offering monthly 5% return on investment and scheme offering 100% return after 18 months, on investment. As per details available on record, Unique had collected an amount of ₹1,84,60,000 from 67 investors for investing in the share market through the aforesaid two schemes, since 2011. The details of the amount collected by Unique are as under:

Amount collected S. No. Details of Scheme No. of investors (₹) 1 Monthly 5% return 1,80,60,000 63 2 100% return after 18 months 4,00,000 4 Total 1,84,60,000 67 d. As per the submission, a sum of ₹1,35,87,636 has been returned to the investors by the Company.

e. SEBI had received complaints from the investors stating therein that the post dated cheques issued by the Company to the investors, at the time of investing the money, guaranteeing the refund of the principal amount invested had returned with the reason 'insufficient funds'.

6. I note that the noticees have not disputed the allegations made in the interim order rather the allegations have been admitted. The submission of the noticee is that the money collected was used in the 'stock market' and 'international forex market', wherein, losses were incurred. The Company has admitted of rotating the money of the investors. I have seen the 'Letter of Security'/ agreement issued by Unique to its customers. The same is in the nature of a letter of acceptance of deposit, providing the details of the post dated cheque of the same deposit amount (bearing the date of next year). This post dated cheque to the investors is in the nature of guarantee of repayment of principal amount invested. The same also contains the agreed return amount payable per month.

7. A 'Portfolio Manager' as defined under Regulation 2(cb) of the PMS Regulations is any person who pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client the management or administration of a portfolio of securities or the funds of the client. As stated earlier, the noticees have not disputed the findings and the observations made in the interim order. As discussed above, it executes 'letter of security' with its investors and manages their funds. Considering the same, I, hereby, conclude that the Company had functioned as an 'portfolio manager' in the securities market in terms of the PMS Regulations without obtaining a certificate of registration from SEBI as mandated under Section 12(1) of the SEBI Act and Regulation 3 of the PMS Regulations. In this regard, the interim order has observed that "PMS Regulations envisage provisions for the protection of investors who avail the services of a registered portfolio manager. It also provides the framework and manner in which PMS activities are carried out. Chapter III of the PMS Regulations enumerates the general obligations and responsibilities of a registered portfolio manager such as the portfolio manager shall abide by the Code of Conduct as specified in Schedule III."

8. I note that the Company has claimed that a sum of ₹1,35,87,636 had been repaid to the investors. However, it is noted that there are several investor complaints alleging that post dated cheques issued by the Company had returned with the reason 'insufficient funds'. I have perused the bank account details submitted by the noticees. These are two sets, one submitted during the personal hearing and the other set pursuant to the personal hearing. From the same, various cash credit entries has been revealed and it is also seen that the payment of monthly profits to the investors were made through NEFT transactions and cash. It is seen that the bank statements captures only the NEFT transactions numbers and the names of the investors are not available. In the absence of such details and proof of cash payments to respective investors/ receipts, it is difficult to conclude that the amounts were repaid to the investors.

9. The violation committed by the noticees, as found in the Order, does attract regulatory action by SEBI. The interim order has contemplated appropriate directions under SEBI Act and rules/ regulations including direction, prohibiting them from buying, selling or otherwise dealing in securities market, either directly or indirectly, in any manner whatsoever.

10. Mr. Chandrakant Shamrao Dhole, Director, Unique has taken the responsibility of undertaking unregistered portfolio management services on behalf of the Company. I note that Mr. Ravindra Shankar Kaurav, another director of Unique, has not submitted anything contrary to the submissions of Mr. Chandrakant Shamrao Dhole and has not denied the allegations. Therefore, it can be concluded that Mr. Ravindra Shankar Kaurav being the director of Unique was aware of the activities of the Company.

11. 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 (Portfolio Managers) Regulations, 1993, hereby issue the following directions:

a. Unique Vision Financial Advisory Pvt. Limited [PAN: AABCU 3600J] and its promoters/ directors namely Mr. Chandrakant Shamrao Dhole [PAN: AGJPD 5155A] and Mr. Ravindra Shankar Kaurav [PAN: AOTPK 5176L] are hereby prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, in any manner whatsoever, for a period of four (4) years.

b. Unique Vision Financial Advisory Pvt. Limited and its promoters/ directors namely Mr. Chandrakant Shamrao Dhole and Mr. Ravindra Shankar Kaurav shall not undertake, either directly or indirectly, any activity in the securities market without obtaining registration from SEBI as required under the securities laws.

c. Unique Vision Financial Advisory Pvt. Limited and its promoters/ directors namely Mr. Chandrakant Shamrao Dhole and Mr. Ravindra Shankar Kaurav shall expeditiously return the monies received from its clients along with the promised returns, in respect of its unregistered portfolio manager activities as found in above 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')]

12. SEBI may also initiate Adjudication proceedings under Chapter VIA of the SEBI Act against Unique Vision Financial Advisory Pvt. Limited and its promoters/ directors namely Mr. Chandrakant Shamrao Dhole and Mr. Ravindra Shankar Kaurav for the violation of indulging in unregistered portfolio management services in the securities market in breach of Section 12(1) of the SEBI Act and Regulation 3 of the SEBI (Portfolio Managers) Regulations, 1993.

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

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

DATE : July 22nd, 2015 PRASHANT SARAN PLACE : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA