Illegal Investment Advisory: SEBI Slaps Rs6 Lakh Penalty, Bans Jayesh Shantilal Raval of Ways2Star

Moneylife Digital Team 27 March 2024

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has barred Jayesh Shantilal Raval (noticee), proprietor of Ways2Star for two years for providing unregistered investment advisory services. While imposing a fine of Rs6 lakh, SEBI also asked Mr Raval to refund Rs48.81 lakh collected as fees from clients, investors or complainants.

In the order, G Ramar, chief general manager (CGM) of SEBI, says, "I note that Mr Raval's activities show that he was acting as an investment adviser without holding the certificate of registration as an investment adviser. Therefore, he knowingly misrepresented himself as a SEBI-registered entity to investors and clients and collected money from them. Such misleading representations are deceptive and fraudulent in nature and hence in violation of Regulations 3 (a), (b), (c) & (d) and 4(1), 4 (2)(k) and 4 (2)(s) of the Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market (PFUTP) Regulations. Further, Mr Raval continuously received investment advisory fees in his bank account since the date of opening of such bank accounts, in violation of Regulation 3(1) of the IA Regulations and Section 12(1) of the SEBI Act. Consequently, I find that he is liable to be imposed with penalty under both Sections 15EB and 15HA of the SEBI Act."

According to the SEBI investigation, Mr Raval operated an investment advisory business through the website ways2star.co.in and via WhatsApp chat, collecting funds for advisory services. He also deceptively used SEBI registration number INA000012306, which belonged to Gaurav Baldev, a SEBI-registered advier.

SEBI received a complaint on the SCORES platform against Mr Raval. During its investigation, the market regulator found that Mr Raval was providing services such as cash intraday, cash delivery, cash BTST, stock cash combo, future intraday, option intraday, future BTST, stock (FNO) and index future & option (F&O).

Further, SEBI observed that the total amount credited to Mr Raval's bank account from the account opening until the account closing was Rs48.81 lakh. Since this account was linked to his website for collecting money related to illegal investment advisory activities. Despite multiple requests, Mr Raval failed to disclose the amount collected. All credit entries in the account during this period are considered funds received for his illegal activities.

The market regulator also mentioned that Mr Raval had not made any submissions to prove that these funds were earned from other sources of income. "Hence, I find that these services were being offered by the noticee for consideration. Therefore, I find that Mr Raval was engaged in the business of providing investment advice to his clients for consideration and thus acted as an investment adviser," Mr Ramar, the CGM says.

Mr Raval is also restrained from selling assets, properties, and mutual funds, shares, and securities held by them in demat and physical form except for the sole purpose of making the refunds.

"Mr Raval shall not undertake, either during or after the expiry of the period of restraint and prohibition, either directly or indirectly, investment advisory services or any activity in the securities market without obtaining a certificate of registration from SEBI as required under the securities laws," the market regulator says.

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