4 Directors of Highbrow Market Research Arrested by CBI, Sent to Judicial Custody

Moneylife Digital Team 08 July 2024

Investor Interest

A court in Kudal in Maharashtra has sent Girish Kumar Pahwani, Laxmikant Sharm, Hemant Agrawal and Swapnil Prajapati, the four directors of Indore-based Highbrow Market Research Pvt Ltd (Ways2Capital), to judicial custody. They were arrested in a share trading fraud worth Rs25 lakh by the central bureau of investigation (CBI).

According to a report from Sakal, between 27 November 2017 and 25 July 2018, the directors and employees of Highbrow frequently contacted one Ajay Chavhan, a teacher from Kudal. They made him invest over Rs25 lakh under the pretext of doubling the money from share market trading.

However, Mr Chavan found that his money was not invested as promised by Highbrow and its directors and employees but misappropriated, thus cheating him. He registered a first information report (FIR) at Kudal police station against 12 people associated with Highbrow, including the company's directors and employees.

As reported by Moneylife, a large number of victims of Highbrow approached the Securities and Exchange Board of India (SEBI) by filing 281 unique complaints online. They also filed as many as 29 FIRs in various states against Highbrow and its directors. But there was no progress.

Finally, the victims approached the Bombay High Court (HC) seeking an investigation by CBI and directions to SEBI for a detailed probe. In January of this year, CBI agreed to take over the case investigation, including the one registered by Mr Chavan at Kudal police station.

Last month, a division bench of justices Revati Mohite Dere and Shyam C Chandak recorded a positive change in SEBI’s and CBI’s stance. The regulator told the court that it had obtained permission from its board to launch prosecution against the company and its directors within eight weeks. (Read: Victims of Investment Adviser, High Brow, Seek Court Help for SEBI & CBI Action)

Last year in September, SEBI, while suspending the registration of Highbrow, barred the firm and its directors Chandan Singh Rajput, Rahul Trivedi, Sunil Atode, Mr Pahwani, Mr Sharm, Mohit Chhaparwal, Mr Agrawal and Mr Prajapati from markets for one year for violating various rules and regulations for investment advisories (IAs).

The market regulator also mentioned that Highbrow has assured or promised returns to its clients and, to that effect, it has manipulated the risk profile of its clients and has sold them multiple services by charging them unreasonable fees and without paying any heed to the principles of suitability.

SEBI also observed that from the risk profile of one LN Singh, his gross annual income was between Rs1 lakh-Rs5 lakh; however, the fees collected from him are Rs78.38 lakh. "The fees is highly disproportional to the gross annual income of Mr Singh. There was no material fact whether or not the wife and daughters of Mr Singh had independent source of income. On the preponderance of probability, it can be held that the family members of Mr Singh were on-boarded by Highbrow to justify exorbitant fees charged by it from the client," SEBI says. (Read: Highbrow Market Research Advisory's Registration Suspended for 1 Year)

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