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Sebi cancels registration of Capvision Investment Advisor for misleading investors

Capital markets regulator Securities and Exchange Board of India (SEBI) on Monday cancelled the registration of Capvision Investment Advisor for promising assured profit to clients in the securities market and misleading investors.

Capvision Investment Advisor was registered with Sebi as an Investment Adviser in June 2014. It is a partnership firm with partners Ravi Prakash Mishra and Rekha Mishra.

In its order, Sebi found that Capvision was engaged in “non-genuine and deceptive activity” of obtaining payments from clients to third-party bank accounts.

Further, Capvision has made representations to its clients, promising such assured returns and thus failed in its responsibility to act in a fiduciary capacity towards its clients. Accordingly, it has violated the code of conduct specified under the investment adviser (IA) rules.

Also, Sebi said that promising assured profit in the securities market amounts to misrepresentation and misleading investors. Such reckless conduct by Capvision intended to induce investors to deal in securities constitutes ‘fraud’ under the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.

The regulator noted that the entity being a registered intermediary has failed to appear in the proceeding and defend the allegation of violation of PFUTP Regulations.

In the past, two adjudication orders were passed against Capvision, levying penalties of Rs 75 lakh and Rs 8 lakh for flouting IA norms. However, these fines were not paid. Following this, recovery proceedings were initiated by Sebi in 2017 and 2018 and the bank accounts of Capvision were frozen.

Thereafter, Partner No 1—Ravi Prakash Mishra, who was the main proprietor of Capvision, engaged one P Chourasiya to open new bank accounts for receipt of money from the clients of his investment advisory business.

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These bank accounts were opened in the name of Chourasiya, who was the proprietor of certain entities with names closely similar to that of Capvision. Payments from clients were also received in another company called Capvision Investment Advisor Ltd (CIAL), whose original directors included Ravi Prakash Mishra and Rekha Mishra who were later replaced in 2019 by Chourasiya and others.

“This is a fraud, in a larger sense played on the system as a whole, whereby in order to bypass the freezing directions, Partner No. 1 has connived with other individuals to continue with his IA business. I also find that the Noticee has not acted in the best interests of its clients and violated the code of conduct and PFUTP Regulations by promising assured profits to its clients,” Sebi Chief General Manager Geetha G said.

Accordingly, the Securities and Exchange Board of India (Sebi) has cancelled “the certificate of registration granted to Capvision Investment Advisor”.

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