Market regulator Securities and Exchange Board of India (SEBI) has imposed a fine of Rs25 lakh on Monetary Solutions and its proprietor, Ankit Vyas (noticee), a SEBI-registered individual investment adviser (IA), for multiple regulatory breaches.
These violations include non-compliance with qualification requirements, failure to maintain proper records, depositing client fees into a personal account, offering free trials, incorrect risk profiling, operating from an unregistered office, failure to publish the investor charter and posting fake reviews on its website.
In an order, Barnali Mukherjee, adjudicating officer (AO) of SEBI, says, " I observe that noticee advertised fake testimonials and its past performance on its website to demonstrate the accuracy of its tips to lure the investors by showing profit generated by those tips and thereby has tried to deceive its clients. I further observed that by making fake statements, the noticee acted fraudulently on the investors to induce them to take advice from the noticee."
SEBI conducted an inspection of Monetary Solutions from 19 September 2022 to 23 September 2022. During this inspection, SEBI found that seven employees of Monetary Solutions lacked the necessary qualifications and certifications from the National Institute of Securities Markets (NISM) required to engage with clients.
Additionally, the market regulator found that Mr Vyas charged fees without client agreements and failed to maintain necessary records like call recordings, KYC (know-your-customer) documents and risk profiles. Mr Vyas claimed data loss due to a hard disk failure but provided no evidence. Consequently, SEBI says Mr Vyas violated multiple regulations and circulars by not maintaining required client records and agreements.
During the inspection, SEBI also discovered that client fees were deposited into Mr Vyas's personal account, contrary to code of conduct clauses and IA regulations. Monetary Solutions also failed to disclose all bank account details as required, breaching regulatory obligations.
Monetary Solutions provided free trials to clients despite SEBI circular prohibiting such practices. This continued non-compliance with the code of conduct as per IA Regulations included offering two day free trials in standard client communications, the order says.
Furthermore, SEBI says the risk profiling questionnaires used by Monetary Solutions included misleading questions implying a direct link between risks and returns. This practice categorised clients into higher risk profiles, potentially aligning with the firm's service offerings that reportedly excluded low-risk investors.
SEBI's inspection also revealed that Monetary Solutions operated from an undisclosed office location not approved by the market regulator, claiming coercion in disclosing a branch in Udaipur but failing to substantiate this claim.
Moreover, Monetary Solutions did not disclose the investor charter on its website or provide a link for complaints on SCORES, further violating IA rules, the SEBI order says.
