Sai Proficient Research was penalised Rs 19 lakh for misleading investors, collusion with an unregistered entity, and non-cooperation during investigations
According to media reports, the Securities and Exchange Board of India has imposed a penalty of Rs 19 lakh on Sai Proficient Research Investment Advisory and its proprietor for violating several regulations, including making false promises of high returns, fraudulent practices, and collusion with an unregistered entity, which is significantly undermining investor trust in the securities market.
Reports sighted SEBI as noticing that Sai Proficient lured investors with exaggerated assurances of returns as high as 95 per cent, a practice strictly prohibited under regulatory norms. Such unrealistic promises, aimed at attracting unsuspecting investors, were classified as fraudulent and unfair trade practices. In its order, SEBI emphasised its commitment to penalise such misconduct to safeguard market integrity.
During the investigation, Sai Proficient's defense was termed a "cock and bull story," reports claimed. SEBI clarified that the company never responded to the regulator and used reasons such as the proprietor's pregnancy complications as excuses for not complying. The regulator added that these were afterthoughts to avoid accountability.
Further investigation showed that Sai Proficient had a relationship with Shree Sai Proficient Financial Services. That was an unregistered entity working as an investment advisory illegally. SEBI noticed that Shree Sai Proficient Financial Services (SSPFS) was acting as a front for Sai Proficient Research and this was being done so that the firm could collect money from the investors. Transactions of over Rs 4 crore were traced through accounts associated with both entities, and SEBI exposed an organized fraud in the scheme of luring people. SEBI said, "Sai Proficient was working in connivance with Shree Sai Proficient Financial Services (SSPFS), using it as a camouflage to lure people into its net".
Adding to the list of its violations, reports said, Sai Proficient had not produced key documents during the investigation. Such documents included KYC records, risk profiling forms, and client agreements - all vital to compliance. The firm remained non-compliant even after numerous notices from SEBI, making its regulatory infractions even more grave.
SEBI’s order underlines its zero-tolerance approach toward entities that compromise investor confidence and the market's integrity. By penalising Sai Proficient, the regulator aims to send a strong message against deceptive practices in the financial advisory sector.
This also reminds investors to be very cautious and verify the credentials of financial advisors before entrusting them with money. SEBI continues to encourage investors to report suspicious activities that ensure a transparent and fair securities market.