BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO: AO/SBM-VB/EAD-3/ 25 /2016]

ORDER UNDER SECTION 15 I OF SECURITIES AND EXCHANGE

BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF SECURITIES
AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING
INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER)
RULES, 1995
In respect of:
Best Stock Solutions,
(Represented by Mr Amit Upadhyay),
7th Floor, Crescent Business Park,
Sakinaka, Telephone Exchange Lane,
Andheri (East), Mumbai- 400072.
{PAN: AAPPU2088M}
____________________________________________________________
FACTS OF THE CASE
1. Securities and Exchange Board of India (hereinafter referred to as SEBI)
observed that Best Stock Solutions (hereinafter referred to as 'Noticee /
BSS') was providing stock advisory tips and Guaranteed Money Making
Share Market Tips to general public / clients through its website (
www.beststocksolutions.com) without being registered with SEBI as an
Investment Advisor. On preliminary examination, it was observed that the
Noticee had used the reference of various SEBI registered Stock Broking
firms through its website for providing guaranteed tips and assured returns
to clients.

Page 1 of 20

2. As the aforesaid information / details obtained from the above mentioned

website

and

also

other details

obtained

during

the

preliminary

examination, prima facie indicated that the activity of the Noticee is in the
nature of offering stock market advisory tips and investment advisory
services to its clients, the concerned department of SEBI viz. Investment
Management Department vide letters dated February 14, 2014, March 7,
2014, April 9, 2014 and May 22, 2014 and also vide emails dated April
10, 2014, May 22, 2014 and June 13, 2014 had advised the Noticee to
refrain from providing stock market advisory tips to its clients and to
ensure compliance with the provisions of SEBI ( Investment Advisers)
Regulations, 2013 (hereinafter referred to as Investment Advisers
Regulations). However, it was observed by SEBI that the Noticee had
failed to respond to the aforementioned letters / emails and also failed to
deactivate the website through which the Noticee was providing stock
market advisory tips and investment advisory activities to its clients. It was
therefore alleged that the Noticees activities were in violation of the
provisions of Section 12 of the SEBI Act, 1992 (hereinafter referred to as
SEBI Act) and also Regulation 3 of the Investment Advisers Regulations.

APPOINTMENT OF ADJUDICATING OFFICER

3. SEBI vide Order dated September 11, 2014 appointed Shri D Ravikumar
as Adjudicating Officer under Section 15-I of the SEBI Act read with Rule
3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by
Adjudicating Officer) Rules, 1995 (hereinafter referred to as 'Adjudication
Rules') to inquire into and adjudge under the provisions of Section 15HB
of the SEBI Act, the alleged violation committed by the Noticee of the
provisions of Section 12 of the SEBI Act read with Regulation 3 of the
Investment Advisers Regulations. Subsequently, upon the transfer of Shri
D Ravikumar, I have been appointed as Adjudicating Officer, in the
present matter, vide Order dated June 22, 2015.

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SHOW CAUSE NOTICE, REPLY AND HEARING

4. Show Cause Notice ref No. A&E/EAD-3/DRK-DS/31070/2014 dated
October 31, 2014 (hereinafter referred to as 'SCN') was issued to the
Noticee in terms of the provisions of Rule 4 (1) of the Adjudication Rules,
to show cause as to why an inquiry should not be held against the Noticee
and penalty, if any, should not be imposed under the provisions of Section
15HB of the SEBI Act for the alleged violation committed by the Noticee of
the provisions of Section 12 of the SEBI Act read with Regulation 3 of the
Investment Advisers Regulations. Vide letter dated November 17, 2014,
the Noticee requested for 15 days time to compile the relevant details/
information and also requested for an opportunity of personal hearing to
be provided in the said matter. Thereafter, it was mentioned by the
Noticee through a letter of authority that Shri Joyashish Maitra of M/s
Maitra J and Co (Chartered Accountants) would represent the Noticee in
all matters relating to the proceedings, including representing the Noticee
for the hearing, filing the reply on behalf of the Noticee etc. A letter dated
March 11, 2015 was subsequently received from M/s Maitra J and Co in
this regard seeking time till March 25, 2015 to submit the reply to the SCN.
Vide letter dated March 24, 2015, M/s Maitra J and Co filed a reply to the
SCN on behalf of the Noticee.

5. The gist of the allegations leveled against the Noticee in the SCN dated
October 31, 2014 are as under :
a) It was mentioned that the Noticee had provided stock market advisory
tips through its website without being registered with SEBI as an
Investment Adviser in terms of the Investment Advisers Regulations. It
was further alleged that the Noticee continued to function as
Investment Adviser despite repeated instructions issued to the Noticee
by SEBI to refrain from undertaking such activities without being
registered with SEBI under the provisions of Investment Advisers
Regulations.
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b) In terms of the provisions of Section 12 of the SEBI Act read with

Regulation 3 of the Investment Advisers Regulations, Noticee was
required to register itself as an Investment Adviser within six months
from the commencement of the Investment Advisers Regulations. The
Investment Advisers Regulations came into existence w.e.f January
21, 2013. However, no application for registration as Investment
Advisor was received by SEBI from the Noticee within 6 months i.e. till
July 20, 2013, and it was alleged that the Noticee continued to
undertake the activities as Investment Advisor, without obtaining the
registration, which prima facie resulted in the violation of the provisions
of Section 12 of the SEBI Act read with Regulation 3 of the Investment
Advisers Regulations by the Noticee. It was also observed that the
Noticee made an application to SEBI for registration as an Investment
Adviser only on June 13, 2014, which is approximately one year after
the above said prescribed period.
c) In view of the above violations alleged to have been committed by the
Noticee, it was alleged that the Noticee was liable for penalty under the
provisions of Section 15 HB of the SEBI Act.
6. In the interest of natural justice and in order to conduct an inquiry in terms
of Rule 4 (3) of the Adjudication Rules, Noticee was granted an
opportunity of personal hearing on August 26, 2015 vide letter dated
August 7, 2015 and again on September 29, 2015 vide letter dated
September 23, 2015. Shri Joyashish Maitra ( M/s Maitra J and Co)
appeared for the personal hearing on behalf of the Noticee on August 26,
2015 and on September 29, 2015. Pursuant to the hearing, Noticee made
additional submissions through M/s Maitra J and Co vide its letters dated
August 25, 2015 and August 31, 2015. The relevant excerpts of the
submissions made by the Noticee (through M/s Maitra J and Co) vide its

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letters dated March 24, 2015, August 25, 2015 and August 31, 2015 are
as follows:
a) Till the beginning of the Year 2014, our website had the contents to
provide knowledge to the general public and we did not reap any
monetary benefit out of the same in any manner at all. Neither did we
solicit any business of stock market in any manner from any person.

b) The website was created for knowledge purposes only and we did not
approach anyone in the open market to solicit any business. No one
from the general public had approached us or invested in stock market
based on our website and neither did we enter into any CIS Schemes,
for that matter. At no point of time, we solicited business on the basis
of investments in market or market investment schemes.

c) We applied for registration as Investment Advisor on June 13, 2014

(within 6 months of the applicability of the particular Section). As of
now, pending the registration, we are not advising anyone regarding
stock market and neither are we sourcing clients from general market.
We have never made anyone invest through our advice.

d) We would like to mention that ours is a proprietorship concern and we

are not listed in the market, so any such benefits did not arise to us. In
the same manner, we did not pin point any particular company in our
website. We provided general information on stock market trends
which are provided even by all news channels on a daily basis for
knowledge purposes. This does not tantamount to deriving particular
benefits in any manner. No one has invested in the market as per our
website.

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e) In this context, your attention is invited to the decision of the Hon'ble

Securities Appellate Tribunal in the matter of Rakesh Agarwal vs. SEBI
(2004) 1 Comp U193 wherein the Hon'ble Tribunal has inter alia held
that the Insider Trading Regulations, if read with the objective of
prohibiting insider trading, make it clear that motive is built into the
regulation and that insider trading without establishing a motive is not
punishable. The Hon'ble Tribunal further held that what is sought to be
prohibited is gaining unfair advantage by indulging in insider trading.
Thus, if it is established that the person who had indulged In Insider
trading had no intention of gaining any unfair advantage, the charge of
insider trading warranting penalty cannot be sustained against him.
f) Ours was an open advisory business and we never dealt with stock
market investment schemes and neither did we advise anyone as to
investment in any particular scrip or company. Since the pendency of
our registration application, we have even drastically reduced our
advisory business. The advisory was mainly to calculate for some
clients their networth and what percentage of income they could invest
in various investment schemes, like Insurance policies, PPF, etc. For
this, some nominal advisory fees were charged.
g) There was no tip given to any corporate client or even retail advisory
clients. BSS never undertook any market approach for any clients.
BSS collected data and forwarded to big advisors (registered) such as
Choksey, Samruddhi and Angel Broking. They analysed the data and
reverted to BSS what was the eligible amount for investment. These
names were reflected in the website of BSS and at no point of time it
was stated by BSS that they were investment advisors and did not
represent as such.

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h) The only glitch in the website was the word TIPS, that too not in the
main page, the website creator committed this. When this was brought
to the notice of BSS they immediately had it removed.
i) Since the regulations were brought into effect, the business was not
viable due to the compliances to be made. However, the advisor for
BSS could not specify the regulations and there was delay in making
the application beyond the required date. We pray for leniency on this
count. We never made any money on this count.
j) BSS finally made the application on 13-06-2014. In the absence of any
confirmation for registration, first the website was shut down on 01-102014 and the client base also started dwindling to negligible figures as
the business was not at all viable
k) It took some time to apply for registration as our advisor at that time
consumed time in spite of him being provided with all the documents.
Anyway, with regards to this, kindly overlook and condone the small
lapse.
l) The contents of the website were very simple, providing knowledge as
to the stock market and no particular company was pin pointed in the
website. No particular company was advised in this regard.
m) No corporate clients were dealt within the same and hence no
particular client base is available.
n) Pending issuance of registration by SEBI we have stopped the
advisory business also.
o) The entity of BSS is being closed full and final from 01-10-2015 and all
business in this company would totally stop.
p) The year wise breakup of the receipts of BSS are as follows:
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Financial Year

Amount

( in Remarks

Rs)
2012-13

11,63,530.00

2013-14

13,78,210.00

2014-15

7,84,260.00

Through BPO training including

some stock market advisory fees
of Rs. 2,46,280.00

2015-16

1,78,278.00

upto August 2015 through BPO

training only

On behalf of the Noticee, M/s Maitra J and Co also made the following
additional submissions during the personal hearing held on August 26,
2015 and on September 29, 2015.
(a) Noticee admitted to the delay on its part in making the application for
registration as Investment Adviser under the Investment Advisers
Regulations. Noticee also mentioned during the course of the proceedings
that it has currently stopped the business of Investment Advisory and have
also removed the website in this regard.
(b) Noticee admitted to the fact that it had provided tips to clients even after
the notification of Investment Advisers Regulations (without being
registered as an Investment Adviser with SEBI).
(c) Noticee also admitted to collection of fees from its clients towards the
advisory services provided to them.
(d) Noticee requested that a lenient view may be taken in the said matter.

CONSIDERATION OF ISSUES AND FINDINGS

7. I have taken into consideration the facts and circumstances of the case,
the material available on record, the reply submitted by the Noticee vide
its letters dated March 24, 2015, August 25, 2015, August 31, 2015 and
also the submissions made by M/s Maitra J & Co on behalf of the Noticee
Page 8 of 20

during the personal hearing held on August 26, 2015 and September 29,
2015. I observe that allegations were levelled against the Noticee that it
had provided stock market advisory tips, guaranteed money making share
market tips to clients through its website www.beststocksolutions.com. It
was therefore alleged that the Noticee had functioned as Investment
Adviser without being registered with SEBI under the provisions of
Investment Advisers Regulations.

8. Before moving forward, the relevant extracts of the provisions of Section

12 of the SEBI Act and Regulation 3 of the Investment Advisers
Regulations, allegedly violated by the Noticee and as mentioned in the
SCN issued to the Noticee is reproduced below:
SEBI Act
"Registration of stock brokers, sub-brokers, share transfer agents,
etc.
12 (1) No stock broker, sub-broker, share transfer agent, banker to an
issue, trustee of trust deed, registrar to an issue, merchant banker,
underwriter, portfolio manager, investment adviser and such other
intermediary who may be associated with securities market shall buy, sell
or deal in securities except under, and in accordance with, the conditions
of a certificate of registration obtained from the Board in accordance with
the regulations made under this Act:
Provided that a person buying or selling securities or otherwise dealing
with the securities market as a stock broker, sub-broker, share transfer
agent, banker to an issue, trustee of trust deed, registrar to an issue,
merchant banker, underwriter, portfolio manager, investment adviser and
such other intermediary who may be associated with securities market
immediately before the establishment of the Board for which no
registration certificate was necessary prior to such establishment, may
continue to do so for a period of three months from such establishment or,
if he has made an application for such registration within the said period of
three months, till the disposal of such application:
Provided further that any certificate of registration, obtained immediately
before the commencement of the Securities Laws (Amendment) Act,

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1995, shall be deemed to have been obtained from the Board in

accordance with the regulations providing for such registration.
.......
(2) Every application for registration shall be in such manner and on
payment of such fees as may be determined by regulations.
(3) The Board may, by order, suspend or cancel a certificate of registration
in such manner as may be determined by regulations:
Provided that no order under this sub-section shall be made unless the
person concerned has been given a reasonable opportunity of being
heard.

Investment Advisers Regulations

Application for grant of certificate.
Reg 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.
(2) An Application for grant of certificate of registration shall be made in
Form A as specified in the First Schedule to these regulations and shall be
accompanied by a non-refundable application fee to be paid in the manner
specified in the Second Schedule
9. I find that the Noticee in its letter dated February 6, 2014, which was
addressed to SEBI had mentioned that it is an entity registered under the
Limited Liability Partnership Act and earlier it was functioning as a
proprietary

firm.

However,

observe

from

the

subsequent

letters/correspondence exchanged between the Noticee and SEBI, which

also includes the information submitted by the Noticee in its application
form for registration as Investment Adviser i.e Form A that the Noticee had
specifically mentioned that it is a proprietary firm functioning in the name

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of Best Stock Solutions and the Proprietors name was also mentioned in
the application form as Shri Amit Upadhyay.

10. I observe that SEBI had received a complaint against the Noticee during
January 2014, wherein it was alleged by the complainant that the Noticee
was providing guaranteed money making share market tips on its website
viz. www.beststocksolutions.com. In this regard, I also observe that the
complainant had enclosed the relevant page extracted from the above
mentioned website. On perusal of the contents mentioned in the complaint
and also the website, I find that the Noticee had used the reference of
SEBI registered Stock Brokers viz. K R Choksey, Networth Direct,
Samurdhi India etc. I observe from the reply of the Noticee that it was
associated with the above mentioned Stock Brokers for the purpose of
sharing stock market related expertise and research data based on past
performances of the listed stocks. I also observe that the Noticee had
added the additional feature Guaranteed Money Making Share Market
Tips on its website so as to entice the clients to invest in the stocks for
which the tips were offered. I find from the contents mentioned in the
website that the logo and tag line of the Stock Brokers mentioned above
were prominently displayed by the Noticee, which leads to a visual
misrepresentation made to the clients who invest in the stocks for which
the tips were offered by the Noticee. Further, it also gives an impression
that the stock market tips and assured returns guaranteed through the
website of the Noticee are backed by the commitment of the Stock
Brokers, as mentioned above.
11. I find from the contents mentioned in the Noticees website that the
Noticee had used the terms such as stock tips, stock market tips on
mobile, short term and long term tips, read our terms and conditions of
stock tips on your mobile for 2 days, Big profit less capital ,Bank Nifty
calls , Future and Options, STBT Tips etc. Further, I also observe that
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the Noticee was assuring guaranteed profits / returns on execution of the

stock tips and were offering stock tips in both the segments of the stock
market i.e cash and derivatives. In view of the above, it goes without
saying that gullible investors would have been easily lured by the contents
mentioned in the Noticees website and would have made investment
decisions in the stocks for which the tips were provided by the Noticee.
Further, these terms that were being used by the Noticee in its website, as
mentioned above, clearly points out to the fact that the Noticee was
engaged in providing investment advisory services to its clients within
the meaning of Investment Advisers Regulations.

12. I observe that the Stock Brokers viz. K R Choksey, Networth Direct and
Samruddhi India in their respective emails addressed to SEBI have denied
knowledge about the fact that the Noticee was using their name through
the website for providing guaranteed stock market tips to clients. I further
observe from the reply submitted by the Stock Brokers that they had
utilized the services of the Noticee for obtaining the search engine for
marketing facilities and as per the agreed terms, they were providing
research calls / research reports to the Noticee. I find that the Stock
Brokers have categorically stated in their reply that the research reports /
calls provided by them to the Noticee did not contain any guaranteed tips
or guaranteed money making share market tips. I also observe that the
Stock Brokers have severed all their business connections with the
Noticee upon receipt of the complaint from SEBI.

13. On perusal of the bank statement of the Noticee i.e Account no.
911020065899477 maintained by the Noticee with Axis Bank, I observe
that there were regular flow of funds in the form of cash deposits ranging
from Rs 5000/- to Rs 15,000/- which were made into the above mentioned
account during the calendar years 2012 and 2013. These cash deposits
that were made into the Noticees bank account are nothing but the
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subscription amount paid by the users of the Noticees website and also
the charges paid by the clients towards the stock advisory services offered
to them by the Noticee. The Noticee has also admitted to receiving these
amounts towards BPO training facilities and receiving small amount
towards stock market advisory services offered to its clients.

14. Contrary to the above observations, I find that the Noticee in its letters
dated August 25, 2015 and August 31, 2015 have denied offering stock
tips to corporate or retail clients, collecting money from the general public,
recommending any company to clients from an investment perspective,
coercing the public to invest in stocks etc. It was mentioned by the Noticee
that the website ( www.beststocksolutions.com ) had contents to only
provide knowledge to its users and the website did not contain any
information recommending investment in the stocks of listed companies. I
am unable to agree with the submissions / views put forth by the Noticee.
It is on record that the Noticee on various occasions have admitted to
offering stock market related advisory services, functioning as investment
advisor and also offering stock market related tips to its clients. Relevant
submissions made by the Noticee in this regard are mentioned below:

Vide letter dated February 6, 2014 addressed to SEBI, Noticee

mentioned that we are in association with renowned stock broking
firms as mentioned in our website with consent of those broking firms
under mutual agreement for sharing stock market related expertise and
research data based on past performance of the listed stocks. The
arrangement is made to create a competitive edge and generate
synergy amongst us by sharing our expert knowledge and hard core
research and not with an intention to do superfluous marketing

Vide letter dated February 6, 2014 addressed to SEBI, Noticee

mentioned that We provide tips to our clients based on the past
performance and financial strength of the stocks. We have added the
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said feature Guaranteed Money Making Share Market Tips in a true

and honest spirit and based on hard core efforts which our expert team
is putting and based on our own experience and judgment. However,
share market is always subject to market risk which every prudent
investor knows including our own loyal clients. Apart from this, we have
also clearly mentioned various disclaimers relating to our services
under Terms of Services which includes all kinds of risks attached
with trading in share market and we make a point to inform all our
users to go through the relevant Terms of Services before
associating with us and using our Tips

Vide letter dated February 6, 2014 addressed to SEBI, it was

mentioned by the Noticee that It is rightly said that if you Dont believe
Yourself Nobody Else will either. We strongly believe our expert team,
their efforts, our experience and judgment and based on that we
provide tips to our clients, however it is upto the prudent investor to
take a call. We are there to make investors informed about the day to
day market activities, analysis and give them suggestions, however the
investors are the ultimate decision takers. We have always worked in a
true spirit for our clients and given them our expert tips to the best of
our knowledge and belief. However, after receiving the Notice from
SEBI we have rightly removed the said line and we assure SEBI and
authorities that such incidence will never happen in future.

Vide letter dated August 31, 2015 addressed to SEBI, Noticee

mentioned that The only glitch in the website was the word TIPS, that
too not in the main page, the website creator committed this. When this
was brought to the notice of BSS they immediately had it removed. In
the same letter Noticee also mentioned that BSS finally made the
application on 13.06.2014. In the absence of any confirmation for
registration, first the website was shut down on 1.10.2014 and the
client base started dwindling to negligible figures as the business was
not at all viable
Page 14 of 20

Vide letter dated June 13, 2014 forwarding the application form for
registration as Investment Adviser, the Noticee had specifically
mentioned that I wish to state that I am a proprietor of Best Stock
Solutions and is already engaged in providing investment advisory
services since June 2011. Our advice are mostly on the equity and
debt products and our clients are traders and investors who seek
guidance from experts. The services we provide are extremely
personalized

and

based

on

thorough

reading,

analysis

and

understanding of financial market.

Thus, from the facts mentioned above and also the observations brought
out in paras 10 and 11 above, I am convinced that the activities of the
Noticee of providing stock market related tips and making stock market
related recommendations and offering advisory services to the investors
on payment of fees falls within the definition of the activities of Investment
Adviser as defined under Regulation 2 (m) of the Investment Advisers
Regulations. The above observations also leads to the inescapable
conclusion that the Noticee had functioned as an Investment Adviser for a
very long period without obtaining registration from SEBI. In view of the
above observations, I also find it very unreasonable on the part of the
Noticee in making conflicting statements / submissions from time to time
as regards the usage of the term Tips in its website and also in the matter
regarding providing stock market related tips and advisory services to
clients through its website.

15. I observe that SEBI had issued letters dated January 31, 2014, February
17, 2014, March 7, 2014, April 9, 2014, May 22, 2014 and also sent
emails to the Noticee on April 10, 2014, May 22, 2014 and June 13, 2014
advising the Noticee to refrain from providing stock market advisory tips
and also to comply with the provisions of the Investment Advisers
Regulations. I further observe that the Noticee had submitted its
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application for registration as Investment Adviser only on June 13, 2014

i.e after prolonged correspondence made by SEBI with the Noticee. I also
find that despite specific instructions issued to the Noticee by SEBI from
time to time to refrain from carrying out the stock market advisory tips and
to comply with the provisions of Investment Advisers Regulations, the
Noticee took steps to deactivate its website only on October 1, 2014.

I observe that in terms of the Investment Advisers Regulations, Noticee

was required to submit its application for registration as Investment
Adviser by July 20, 2013. Further, SEBI vide Press Release ( PR) No53/2013 dated May 29, 2013 had advised that In terms of the Investment
Advisers 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 or he is specifically exempt Also,
vide Press Release No 77/2013 dated August 28, 2013, SEBI had further
advised that All the persons acting as an investment adviser before the
commencement of Investment Advisers Regulations are advised to make
their application for grant of registration before October 21, 2013 to
continue to do so and shall comply with the requirement of obtaining a
certificate of registration for acting as Investment Adviser under the
Investment Advisers Regulations However, in spite of the above
instructions of SEBI and also the repeated letters/emails sent to the
Noticee by SEBI advising the Noticee to comply with the provisions of
Investment Advisers Regulations, I find that the Noticee had submitted its
application for registration as Investment Adviser only on June 13, 2014
and deleted its website from the public domain on October 1, 2014. In the
process, I observe that the Noticee has functioned as an Investment
Adviser for a lengthy period without obtaining registration from SEBI. This
shows scant respect and defiance exhibited by the Noticee towards
complying with the instructions of SEBI. Insubstantial arguments put forth
by the Noticee in this regard that its advisor had taken time to submit the
Page 16 of 20

application for registration, compliances were required to be made in the

matter of registration etc cannot be accepted.
16. I observe that the Noticee in its reply vide letter dated March 24, 2015 has
mentioned that it had not derived any trading benefit or indulged in Insider
Trading. Further, Noticee also mentioned that it had not undertaken any
CIS activity or schemes. In this regard, Noticee also quoted the decision of
Honble Securities Appellate Tribunal (SAT) in the matter of Rakesh
Agarwal Vs SEBI (in the year 2004). I observe that the above matter,
which was decided by the Honble SAT was regarding allegation of insider
trading committed by Rakesh Agarwal (appellant). I further observe that
the present proceedings against the Noticee has been initiated for its
failure to comply with the provisions of Section 12 (1) of the SEBI Act read
with Regulation 3 (1) of the Investment Advisers Regulations. As such, I
do not think it necessary to deal with the issues put forth by the Noticee on
Insider Trading, trading benefits derived in this regard, indulging in CIS etc
as they are not relevant in the context of the present proceedings against
the Noticee.
17. Thus, from the facts and circumstances of the case and the observations
made above, I am convinced that the Noticee has functioned as
Investment Adviser for a prolonged period without obtaining registration
from SEBI. In the process, the Noticee has violated the provisions of
Section 12(1) of the SEBI Act read with Regulation 3 (1) of the Investment
Advisers Regulations.
18. The Honble Supreme Court of India in the matter of SEBI Vs Shri Ram
Mutual Fund ( 2006) 68 SCL 216 (SC) held that In our considered
opinion, penalty is attracted as soon as the contravention of the statutory
obligation as contemplated by the Act and the Regulations is established
and hence the intention of the parties committing such violations becomes
wholly irrelevant
Page 17 of 20

19. In view of the above, I am convinced that it is a fit case to impose

monetary penalty on the Noticee under the provisions of Section 15 HB of
the SEBI Act, which reads as under:
Penalty for contravention where no separate penalty has been
provided.
Regulation 15 HB. Whoever fails to comply with any provisions of this
Act, the rules or the regulations made or directions issued by the
Board thereunder for which no separate penalty has been provided,
shall be liable to a penalty which shall not be less than one lakh
rupees but which may extend to one crore rupees

20. While determining the quantum of penalty, it is important to consider the

factors stipulated in Section 15 J of the SEBI Act, which reads as under:
15 J Factors to be taken into account by the adjudicating officer :
While adjudging the quantum of penalty under Section 15 I, the adjudicating
officer shall have due regard to the following factors, namely(a) The amount of disproportionate gain or unfair advantage, wherever
quantifiable, made as a result of the default;
(b) The amount of loss caused to an investor or group of investors as a result
of the default;
(c) The repetitive nature of the default

21. The material made available on record has not quantified the amount of
disproportionate gain or unfair advantage made by the Noticee and the
loss suffered by the investors as a result of the Noticees default. I observe
that Noticee vide its letter dated August 31, 2015 has confirmed that it had
received an income of Rs 11.63 lakh for the financial year 2012-13, Rs
13.58 lakh as income during the financial year 2013-14, Rs 7.84 lakh
during the financial year 2014-15 and Rs 1.78 lakh during the financial
year 2015-16 ( upto August 2015). However, I observe from some of the
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records submitted by the Noticee during the course of the proceedings,

which also contains disclosure made by the Noticee to the Department of
Service Tax under the Voluntary Compliance Encouragement Scheme
2013 that the Noticee has reported a total amount of Rs 41.48 lakh as the
amount received by it as money during the period April to December 2012
(i.e for 9 months during the year 2012). The above details on income
reported by the Noticee to the Service Tax authorities is inconsistent with
the Noticees confirmation made to SEBI that it had received Rs 11.63
lakh as income during the FY 2012-13. In view of the above, the veracity
of the income details submitted by the Noticee to SEBI is doubtful.

22. I am of the firm opinion that the activities undertaken by unregistered

intermediaries in the securities market seriously compromise the
regulatory framework and are detrimental to the interest of the investors in
the securities market. The interest of the investors and orderly
development of the securities market requires that perpetrators of such
activities should be suitably penalized. I cannot lose sight of the fact that
the Noticee had functioned as an unregistered Investment Adviser in the
securities market for a prolonged period. I find that despite repeated
instructions issued to the Noticee by SEBI to refrain from undertaking such
activities and to comply with the provisions of Investment Advisers
Regulations, Noticee failed to adhere to the instructions of SEBI and
continued to function as an unregistered entity thereby putting the
investors to large risk. Such defiance displayed by the Noticee towards
regulatory instructions cannot be viewed lightly. Therefore, it is necessary
that a justifiable penalty is imposed on the Noticee to meet the ends of
justice.

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ORDER

23. After taking into consideration all the facts and circumstances of the case,
the material on record and the factors stipulated in Section 15 J of the
SEBI Act, I, in exercise of the powers conferred upon me under Section 15
I of the SEBI Act, impose a penalty of Rs 12,00,000/- ( Rupees Twelve
Lakh only) on the Noticee viz. Best Stock Solutions ( Represented by its
proprietor Mr Amit Upadhyay) in terms of the provisions of Section 15 HB
of the SEBI Act, 1992. I am of the view that the above penalty will be
commensurate with the violation committed by the Noticee.
24. The penalty shall be paid by way of demand draft drawn in favour of SEBI
Penalties Remittable to Government of India payable at Mumbai within
45 days of the receipt of this Order. The said demand draft shall be
forwarded to the Chief General Manager, Enforcement Department,
Securities and Exchange Board of India, SEBI Bhavan, Plot No. C 4 A,
G Block, Bandra Kurla Complex, Bandra (East), Mumbai 400 051.

25. In terms of the provisions of Rule 6 of the Adjudication Rules, copies of

this order are being sent to the Noticee and also to Securities and
Exchange Board of India.

Place: Mumbai
Date: 03.05.2016

SURESH B MENON
ADJUDICATING OFFICER

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