Description

SEBI final order addressing illegal unregistered investment advisory activities by Mr. Madhav Tiwari (Divinecommodity.co), including refund directions and market debarment.

Summary

SEBI issued a final order against Mr. Madhav Tiwari, Proprietor of Divinecommodity.co, for conducting illegal unregistered investment advisory activities. The order follows an earlier SEBI Order dated September 20, 2024, which directed the Noticee to refund INR 1,70,12,615 collected from investors, imposed a 2-year market debarment, and levied penalties totaling INR 6,00,000 (INR 5,00,000 under section 15HA and INR 1,00,000 under section 15EB of SEBI Act). The Noticee challenged the refund amount before the Securities Appellate Tribunal (SAT), claiming the amount included income from other businesses (SEO, real estate, astrology services) and that only INR 9,66,207 was from advisory services. This final order addresses the computation of illegal gains and analyzes evidence provided by the Noticee.

Key Points

  • Mr. Madhav Tiwari operated as an unregistered investment advisor through Divinecommodity.co
  • Admitted to acting as investment advisor without SEBI registration certificate
  • Knowingly misrepresented himself as SEBI registered entity
  • Collected funds from investors with fraudulent assurance of guaranteed returns
  • Original SEBI Order (September 20, 2024) directed refund of INR 1,70,12,615
  • Noticee contested the refund amount, claiming only INR 9,66,207 was from advisory activities
  • Noticee appealed to SAT arguing other income sources were wrongly included
  • This final order examines computation of illegal gains and evaluates evidence including digitally generated invoices, ledgers, and bank statements

Regulatory Changes

No new regulatory changes introduced. This order enforces existing regulations under:

  • Section 12(1) of SEBI Act read with Regulation 3(1) of SEBI (Investment Advisers) Regulations, 2013
  • Section 12A(a), (b), (c) of SEBI Act
  • Regulations 3(a), (b), (c), (d), 4(2)(k), and (s) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market), 2003

Compliance Requirements

  • Investment advisors must hold valid SEBI registration certificate before providing advisory services
  • Entities must not misrepresent themselves as SEBI registered when unregistered
  • Prohibition on fraudulent practices including false assurances of guaranteed returns
  • Refund obligations for illegally collected funds from unregistered advisory activities
  • Market access restrictions during debarment period

Important Dates

  • September 20, 2024: Original SEBI Order issued
  • February 6, 2026: Final order published
  • Debarment period: 2 years from September 20, 2024 or until filing of repayment report, whichever is later

Impact Assessment

This enforcement action reinforces SEBI’s strict stance against unregistered investment advisory activities and fraudulent practices. The order demonstrates SEBI’s scrutiny of fund collection claims and burden of proof requirements on noticees to substantiate income sources. The case establishes precedent for:

  • Detailed analysis of bank statements and financial records to determine illegal gains
  • Evaluation of digital invoices and ledgers as evidence
  • Distinction between advisory income and other business income

Investors are reminded to verify SEBI registration status of investment advisors before engaging services. The market impact is limited to the specific case but serves as a deterrent for unregistered advisory activities. The refund mechanism protects affected investors while penalties and debarment enforce regulatory compliance.

Impact Justification

Enforcement action against unregistered investment advisor with refund and debarment directions; precedent for regulatory compliance but limited market-wide impact