Mumbai: The Securities and Exchange Board of India (SEBI) has imposed a ₹19 lakh penalty on Shree Sai Proficient Financial Services (SSPFS) for regulatory violations and misleading investors with false promises of returns. Dismissing the firm's defence as a "cock and bull story" and an “afterthought,” SEBI took a firm stand against unregistered entities offering illegal investment advisory services.
SEBI Takes Action Against Regulatory Breaches
SEBI's recent crackdown highlights its zero-tolerance approach toward regulatory violations and fraudulent activities in the financial market. In the case of SSPFS, the market regulator uncovered serious breaches, including collusion with an unregistered entity, Sai Proficient Research, to deceive investors.
Allegations and Findings
SEBI alleged that SSPFS acted as a front for Sai Proficient Research, facilitating a financial trail of over ₹4 crore through accounts linked to both entities. The investigation revealed that SSPFS lured investors with misleading promises of returns as high as 95%, violating SEBI regulations that explicitly prohibit such practices.
The regulator also found that SSPFS failed to cooperate with the investigation and refused to provide critical documents, including KYC records, risk profiling forms, and client agreements. SEBI deemed these actions as fraudulent and unfair trade practices, further eroding investor confidence in the securities market.
SEBI’s Stand on Ignorance of Law
Earlier this month, SEBI imposed penalties on Premier Polyfilm for related-party transactions (RPT) conducted without necessary approvals. The regulator reiterated the principle of "Ignorantia juris non excusat" (ignorance of the law excuses no one), emphasizing that a listed company with two decades of experience cannot plead ignorance.
A Warning for Errant Firms
SEBI’s decisive action against SSPFS sends a strong message to unregistered entities and errant firms attempting to bypass regulations. By penalizing SSPFS and exposing its fraudulent activities, SEBI aims to safeguard investor interests and maintain integrity in the securities market.
The case underscores the regulator’s commitment to curbing financial malpractice and ensuring that the market operates transparently and fairly.
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