Illegal Investment Advisory 4W Wealth Management, 5 Directors Barred from Markets, SEBI Orders Them To Refund Rs12.83 Crore to Investors

Moneylife Digital Team 27 June 2024

Market regulator Securities and Exchange Board of India (SEBI) has confirmed its order barring 4W Wealth Management Pvt Ltd and the firm's directors Bhavesh P Bhensdadia, Rinkalkumar Mohanbhai Chopda, Vivek Laxmanbhai Patel, Nileshbhai Chandubhai Patel and Parth Kanubhai Patel (noticees) from markets for two years for operating illegal investment advisory and misleading investors. They are also asked to refund Rs12.83 crore collected as fees from its investor clients.

In September 2023, SEBI issued an order against 4W Wealth Management4W Wealth Management and the company's five directors. However, three directors, Mr Bhensdadia, Mr Chopda and Parth Patel, challenged the SEBI order before the Securities Appellate Tribunal (SAT), alleging procedural unfairness. On 3 May 2024, while allowing the appeal, SAT instructed SEBI to reconsider the matter after hearing these three.

In an order, G Ramar, chief general manager (CGM) of SEBI, says, "The noticees were engaged in the activities of providing investment advisory services without obtaining the requisite registration from SEBI, as required in terms of Section 12(1) of the SEBI Act, of the SEBI Investment Advisers Regulations, 2013 (IA Regulations). Further, it was alleged that the amounts credited in the bank accounts of the noticee were received as fees towards the services rendered as an investment advisor."

SEBI also found that 4W Wealth Management and its directors have collected around Rs12.83 crore in their bank accounts with Axis Bank, ICICI Bank, HDFC Bank, and State Bank of India. The noticee has not produced any material to show the sources of this fund. However, narrations of the remarks of most of the entries point towards fees for investment advisory services, it added.

"Further, with regards to the submission of the noticees on the breakup of the amount credited in their four bank accounts, also specifying the amount of advisory fees collected, I note that the Noticees have admitted that they were involved in providing investment advisory services to the clients. Accordingly, they are required to refund the money collected as advisory fees to their clients and submit a completion report in this regard to SEBI. It is, therefore, at the time of submitting the completion report to SEBI, the complete details on the extent of the credits received in the four accounts mentioned above, as stated in the SCN, along with the supporting documents duly certified by an independent chartered accountant, may be provided to SEBI, as claimed," the SEBI CGM says.

Comments

User

parimalshah1

3 months ago

What happens to people who lost money? Why are these guys not in jail?
Just restraining them from market - is it enough punishment?
This is just fooling general public to make them believe that SEBI is regulating.
Nonsense.
This is not regulating but encouraging such illegal activities.
At the most, one is barred from the market.
So, the family members can access the market!