Summary of an Order passed by the SEBI in the matter of Tradebizz Research

(Proprietor: Mr. Santosh Singh Parihar) dated 22nd August, 2019

Tradebizz Research is a SEBI Registered Investment Adviser (INA000004096) based in

Indore (M.P.). SEBI carried out inspection during 10-11 October, 2017 for the period 1st
April, 2016 to 30th September, 2017 and found various non-compliances and
irregularities in their system which are mentioned below:

 In the name of advice, Tradebizz was providing Tips/calls to its client.

 Tradebizz’s employees was promising assured/guaranteed returns to its clients

and was also charging unreasonable fees from them. Example of some are:

Assured Profit Service Fee

2,70,000 1,20,000
3,00,000 91,000
9,00,000 to 11,00,000 2,80,000
They were promising these returns in 45 days on the capital of Rs.2 lacs, which
was approx. 1217% return p.a. which is unrealistic and misleading.

Whatsapp chats of employees with clients were included in the order.

 It was clear by the Whatsapp chats that employees were pressurizing the clients
to pay the extra service amount and were also forced to shift to other services.

 In a case, mentioned in the Order, employee of the Tradebizz informed the client
that he could have earned a profit of 2.8 lakh if he would had trade on his
directions. It was merely done to lure the investor. Here, the employee was
guilty on the part of lack of disclosure as to the probability of incurring losses is
equal to the probability of making gains.

 It was also held that the IA was upgrading the service packages before
completion of earlier service and that too without doing any fresh risk profiling
and was also selling multiple services to the single client regardless of his risk
taking capacity.

 Service charges were all disproportionate to the period of services.

 If client started losing their money, Tradebizz stopped responding to the client.

Compliance Manager
9617286847 / 9179624120
  Tradebizz was charging additional fees apart from the service fee such as file
transfer charges, charges for resolving trading problem, tax, shifting to higher
service to recover loss, temporary loan/advance, portfolio transfer, additional
amount for issuing refund of earlier fees paid. This was just done to extort more
and more money from the clients.

 Tradebizz was collecting the fees for services prior to the KYC and Risk Profiling.
After selling of the service packages IA was doing Risk profiling.

 It was held that Tradebizz was mentioning in its Welcome Mail that if not
reverted within three working days then it will be assumed that client complies
with the terms and conditions and understand the risk involved. It was held that
such statements do not absolve the IA from its mandatory obligation to assess
the client’s financial situation, investment experience and investment objectives
before advising / selling a product / package to him.

 By sending Risk Profiling after the product is sold, IA cannot shelter under the
argument that the client is aware of the risks associated with his
investment/product.

 Tradebizz was selling products/services to the Low risk clients which were
designed for high risk and medium risk clients.

 Tradebizz was charging very unreasonable fees as compared to the client’s

proposed investment amount and his financial strength and as such Tradebizz
was not selling products / services based on client’s investment objectives and
financial situation.

 Tradebizz failed to file ATR with respect to its complaints on SCORES within 30
days. Further the Complaint remained pending for more than 30 days.

 SEBI further found that while doing inspection, KYC documents were not
available of many clients and KRA process was also not followed.

 It was also found by SEBI that Tradebizz didn’t gave the training to its
employees about PMLA i.e. Prohibition of Money Laundering Act.

 SEBI further sought for Compliance Audit Report as per Regulation 19(3) from
Tradebizz, which Tradebizz couldn’t provide.

Compliance Manager
9617286847 / 9179624120
  Tradebizz had procured user id and password of its clients’ trading account and
executed the trade on behalf of the clients. SEBI held that an IA is in the business of
providing investment advice in respect of securities and investment products. It is
outside its scope of activities to trade on behalf of its clients. Furthermore, the
information which the IA can seek from its clients has to be relevant for the purposes of
the services to be provided to them. In the instant matter, prima facie, the IA was seeking
their trading account details which is not remotely relevant to the services offered to them
as it does not concern about their financial situation, investment experience and
investment objectives.

 SEBI also held that Tradebizz had ”No Refund Policy”, which is not fair and in
the best interest of the client as it is unreasonable and unfair for the IA to retain
the entire subscription fee paid by the client.

 Tradebizz was running a pre-meditated device, plan or scheme where under, the
tele-callers / employees / representatives of Tradebizz were luring gullible
investors by promising assured profits / unrealistic returns and then more
money would be extracted from them by upgrading them from one package to
another, asking for additional payment on the pretext of various types of fees
such as fee for file transfer, senior executive charges, etc. this very nature of
investment advisory activity is fraudulent and in violation of the PFTUP and IA
Regulations

 SEBI noted that an amount of Rs.13,54,37,734 has been collected by Tradebizz

from the clients till 12th June, 2019 and it has been held by SEBI that Tradebizz
would be liable to refund the money collected by it from the clients subject to
the adjudication of the allegations on merits.

Order

In order to protect the interests of the investors and integrity of the securities market
and to prevent Tradebizz from alienating any assets, SEBI gave following directions:

 Restrained Mr. Santosh Singh Parihar from buying, selling or dealing in the
securities market;
 Ceasing the activity of Tradebizz research and any other employee/person
working under him/it in his/its Investment Advisory ;
 To provide full list of inventory held in his name or firm’s name;
 Not to dispose any of the assets held in his name or firm’s name;

Compliance Manager
9617286847 / 9179624120
  Not to make any debit to his Demat account;
 Not to make any debit to his Bank account.

It is just an INTERIM ORDER of SEBI to prevent Tradebizz Research to carry out such
fraudulent activities, FINAL ORDER IS YET TO COME!!!!!!.

Disclaimer: This summary is not a full and complete recitation of the Order. It is an
attempt to capture in broad terms the nature and scope of the Order. This summary has
been prepared in an effort to highlight key elements of the Order in an abbreviated
format, not to replace them. Every effort has been made to avoid mischaracterizations
and to present fairly the views provided. Any failure to do so is unintentional. The full
order may be viewed in their entirely at
https://www.sebi.gov.in/enforcement/orders/aug-2019/interim-order-in-the-matter-
of-tradebizz-research-proprietor-santosh-singh-parihar-_43988.html

Compliance Manager
9617286847 / 9179624120