Description

SEBI imposes penalties on Capital Stroke Investment Services Pvt. Ltd. and its directors for non-compliance with investment adviser regulations during 2019-2020.

Summary

SEBI has issued an adjudication order against Capital Stroke Investment Services Pvt. Ltd. (Registration No. INA000001316) and its three directors for violations of investment adviser regulations. The order follows an inspection covering the period from April 1, 2019 to September 22, 2020, which revealed non-compliances with SEBI Act, PFUTP Regulations, and IA Regulations.

Key Points

  • Capital Stroke Investment Services Pvt. Ltd. is a SEBI-registered investment adviser under scrutiny
  • Three directors involved: Upendra Singh Rajput, Prashant Singh Baghel, and Kamlesh Dhole
  • Inspection period covered April 1, 2019 to September 22, 2020
  • SEBI issued interim order on August 27, 2021 and confirmatory order on June 8, 2022
  • Multiple adjudicating officers appointed due to transfers and case reallocations
  • Violations include non-compliance with SEBI Act, PFUTP Regulations, and IA Regulations

Regulatory Changes

This case reinforces existing investment adviser compliance requirements under SEBI regulations. No new regulatory changes are introduced, but enforcement standards are highlighted.

Compliance Requirements

  • Investment advisers must maintain proper books of accounts and client records
  • Compliance with KYC requirements and client agreement documentation
  • Proper fee collection and refund procedures must be followed
  • Directors of investment adviser entities are personally accountable for regulatory compliance

Important Dates

  • Inspection Period: April 1, 2019 to September 22, 2020
  • Inspection Conducted: November 3-6, 2020
  • Interim Order: August 27, 2021
  • Confirmatory Order: June 8, 2022
  • Final AO Appointment: April 30, 2025

Impact Assessment

This enforcement action serves as a warning to investment advisers about maintaining regulatory compliance. While specific to one entity, it reinforces SEBI’s commitment to monitoring and penalizing non-compliant investment advisers. The case demonstrates the thoroughness of SEBI’s inspection process and the potential consequences of regulatory violations in the investment advisory space.

Impact Justification

Regulatory enforcement action against registered investment adviser affects compliance standards but has limited market-wide impact