Victims of Investment Adviser, High Brow, Seek Court Help for SEBI & CBI Action
In an era where influencers hawk snake venom as well as investment advice, and people routinely fall prey to dubious WhatsApp/Telegram groups promising sky-high profits, shouldn’t the market regulator, with its stringent reporting and compliance requirements for registered investment advisers (RIAs), keep a hawk-like eye on their activities? That would be a wrong assumption.
A legal battle by victims of High Brow Market Research Investment Advisor Pvt Ltd (High Brow) reveals why. The case harks back to a time before the explosive, post-COVID bull run in the Indian market. Despite a set of highly qualified promoters and all the SEBI-mandated certification in place, High Brow was actually running an illegal portfolio management service (PMS) disguised as an advisory, promising high, guaranteed returns and charging hefty service fees.
Complaints against its shady dealings began to be lodged on the Securities and Exchange Board of India’s (SEBI) online complaints portal (SCORES) and its various regional offices as early as in 2015. Yet, according to a writ petition filed in the Bombay High Court, the market regulator took action only in 2019.
With no prospects of reclaiming their money despite SEBI’s orders in 2019, 2020, and 2023, victims started lodging police complaints across the country. The scale and extent of the fraud became apparent, even to the victims after they formed a WhatsApp group during COVID and began sharing experiences. This led one set of investors to approach the Bombay High Court in 2022 seeking an investigation by the central bureau of investigation (CBI) and directions to SEBI.
Their petition points out that 29 first information reports (FIRs) had been filed in different states (some were subsequently quashed), and SEBI has received around 281 unique complaints online. It said that the local police were ill-equipped to handle the scale and complexity of this scam. The high court petition led to initial success in January, with CBI agreeing to investigate High Brow; but SEBI’s initial stand was that it had done all that it could which was to pass an order in 2023, barring the company and its directors.
The investors got a significant break through last 20thJune, when a bench of justices Revati Mohite Dere and Shyam C Chandak recorded a positive change in SEBI 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.
Advocate Samarth Moray, who is appearing for the lead petitioner, Arun Seth said, CBI's  investigation is still in progress and witness statements are being recorded.
So what is this matter that has both SEBI and CBI on its tail?
High Brow was incorporated in Madhya Pradesh by the promoters Swapnil Prajapati, Hemant Agarwal, Mohit Chhaparwal, and Lakshmikant Sharma. It employed 250 business development executives, and a now-defunct website called, offering research-based stock tips and investment advice.
According to the petition, High Brow’s modus operandi was to cold-call investors, offering investment packages with a service fee and promising high guaranteed returns. Victims, perhaps, saw it as a PMS, but there were no documented processes for selecting investments. The sole purpose was, allegedly, to extract a service fee which, according to a SEBI order, often exceeded the proposed investment amount, misleading investors into expecting high guaranteed returns.
Between 2016 and 2019, SEBI first issued ‘cease & desist’ orders against High Brow; but, at that time, the company was apparently in a defiant mood and even approached the securities appellate tribunal (SAT) against the SEBI order. As police complaints mounted, High Brow’s directors filed a criminal writ petition in the Bombay High Court seeking to quash some FIRs in Mumbai. This was withdrawn in 2022 after the petitioners failed appear in court.
Meanwhile, SEBI continued its investigation. In May 2019, SEBI prohibited directors and employees of High Brow from trading in securities. They were required to provide an inventory of all assets and were barred from disposing any assets. Depositories were directed to ensure that no debits were made in the demat accounts held by High Brow.
Until this time, the company had been settling some complaints by paying victims who filed FIRs or complained aggressively. At one point, the Bombay High Court, while allowing the High Brow promoters to withdraw a petition, had ordered them to pay Rs10,000 to the Children's Aid Society in Mumbai for misusing police resources to settle private disputes.
In January 2020, Madhabi Puri Buch, then a whole-time member (WTM) of SEBI, confirmed punitive action against the company. In July 2022, SEBI issued another show-cause notice to High Brow’s directors asking why they should not be ordered to refund over Rs72 crore to victims.
Advocate Moray says, “There are 10-15 FIRs filed across the country against these individuals.” The petition meticulously details the efforts of investors and various police stations, particularly Cyberabad and its police, in tracing the identities and backgrounds of the petitioners. It outlines their modus operandi and how they acquired databases for a price to reach potential investors across India. At one point, the Cyberabad police had even arrested Swapnil Prajapati; but he is allegedly absconding after being released on bail (which, if proved, would be a serious offence).
Meanwhile, in September 2023, SEBI suspended the registration of High Brow for one year (Read:Highbrow Market Research Advisory's Registration Suspended for 1 Year) and banned the firm and its directors from the markets for the same period for violating various investment advisory (IA) regulations.
This order confirmed many of the allegations by the victims: fraudulent and manipulative actions, unreasonable fees, maximising its own revenue at the cost of clients, selling unsuitable investment packages to customers and failure to resolve 93 complaints forwarded by SEBI’s online grievance redress portal. However, these was of little use to victims who wanted their money back.
The End Game?
While High Brow victims have something to be hopeful about, the battle to get any part of their money back still seems long and tough. The case is posted for another hearing on 22 August 2024. But CBI has to conclude its investigation before filing a charge-sheet and the case could drag on for a while. SEBI too, at best, would only have filed fresh prosecution in the intervening eight weeks, which would also take years to resolve.
Meanwhile, the only relevant question for any victim of an investment scam is: Will I get any money back? In this case, the petitioners have asked that a small sum of Rs1.32 crore, that was impounded by SEBI from the company’s accounts, should be paid to the victims. They have also demanded restitution from SEBI’s Investor Protection Fund which has never before been used for this purpose. Will High Brow victims succeed in their plea?
It is hard to say. For the moment, a real victory seems far away and will depend on the outcome of prosecution launched by SEBI and CBI. It makes one wonder whether victims of financial fraud should only take comfort from interim successes, because meaningful justice is as expensive as it is elusive. Their battle is an important case study for lakhs of investors who have been cheated when over 32 brokers running similar schemes have defaulted.
2 weeks ago
Director CBI and his Officers seem Busy Targeting Big-Wig Political Opponents. Financial Fraudsters who Brazenly Loot Commoners should be Prosecuted Fast but neither CBI nor SEBI is Serious Enough. As a result, Small Retail Investors Do Not get their Money Back is Not a Good Thing to Happen but Opposition in Parliament should Take up these Issues in Right Earnest.
3 weeks ago
This is criminal and high brow guys should be in Jail. What prevented SEBI from filing a criminal case? Are there some well wishers of high brow in SEBI?
3 weeks ago
Thank you mam for your efforts. You people are real heroes of the country. Bring truth to light is a great to all of us.
God bless you mam....!!! ????????????
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