Illegal advisory tries to delete website, escape; Sebi officials dig out proof from archives

The complainant had approached the local police station first, but he was directed by the police to the capital-markets regulator. (Photo by Frederic Bartl: Pexels)

You can run, you can hide, you can even try erasing your entire online presence by deleting a website, but you can't escape the capital-market regulator's eye.

A person tried to elude regulatory action by deleting the website from which he was running an illegal advisory.

But the officials of Securities and Exchange Board of India (Sebi) traced the website and its contents, which proved the existence of an illegal advisory, by going through its archives. The regulator has directed Shashikant Kumar, owner of SM Global Research, to return the fee collected from running this unregistered advisory and imposed a penalty that is nearly four times the profits made.

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Through an order issued on July 19 by Sebi's Chief General Manager, G Ramar, the illegal advisory's owner Kumar has been asked to return a little over Rs 1.63 lakh, which were proceeds from an illegal activity, and has been asked to pay a fine of Rs 6 lakh.

The market regulator started investigating Kumar after receiving a complaint on April 21, 2022. The complainant had been contacted over a phone call by a person who identified as an employee of SM Global Research, which offered investment advisory service.

The complainant made a small profit from the first call and then lost Rs 75,000 in the second one. The complainant was asked to transfer another Rs 1.5 lakh, with a promise of 5 times the profit. But there was another loss.

Over five installments, Kumar's firm had collected Rs 1.51 lakh as advisory fee and caused a loss of Rs 2.75 lakh to the complainant. Later, it was found that Kumar's firm had collected over Rs 1.6 lakh in advisory fee, through two bank accounts. When asked for a refund of the fee, Kumar's firm did not oblige. The complainant went to the local police station, who directed the complainant to Sebi.

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Sebi's officials checked the numbers from which the WhatsApp messages with the trading calls were given, and the details of the person holding the bank accounts to which payments had to be made, and everything pointed to Kumar.

Kumar had a website in SM Global Research's name but the website had been taken down. However, Sebi's officials pulled out the details from web archives and got proof of the illegal advisory.