Sebi directs HBJ Capital Services, others to refund illegal fees collected from clients

Markets regulator Sebi has asked HBJ Capital Services Pvt Ltd to refund within three months the fees collected from clients while acting as an unregistered investment adviser, and also restrained its directors from accessing securities market. Directors of the firm -- Kumar Harendra, Amrita Singh, Abhishek Kumar Singh and Jitendra -- are required to ensure that the directions are complied with and in case of failure to repay the investors, the directors shall "jointly and severally, refund the money collected by HBJ as fee, during their respective period of directorship, to the investors within a further period of two months," Sebi said in an order on Tuesday.

HBJ LLP, which was carrying out alternative investment fund activities without obtaining requisite registration, has also been directed to refund the money collected from the investors or partners along with promised return. In the event of failure, Kumar Harendra and Amrita Singh shall refund the money collected by HBJ LLP jointly and severally, during their tenure as designated partners, Sebi added.

Additionally, HBJ Capital, HBJ LLP and the officials have been barred from the securities market till the directions for refund and repayment are complied with. From the date of completion of refund, they shall further be restrained from the securities market for a period of two years, Sebi said.

They have also been restrained from holding positions as directors or key managerial personnel of any listed entity for a period equal to the period of their debarment. The directions come after the regulator "concluded that HBJ was carrying out investor advisory activity without obtaining certificate of registration from Sebi."

Sebi had noted that fees was collected on behalf of the company in breach of legal provisions as it can be collected only after the legal requirement of certificate of registration is complied with by the company. Besides, it added that HBJ LLP carried out activity of alternative investment fund (AIF) without complying with the relevant provisions of AIF Regulations."

The firms had claimed that they had already made payments to the investors and partners, but did not produce any documentary evidence. In this regard, Sebi said that for prior payments made to its partners/investors, the firms shall produce a peer reviewed chartered accountant's certificate certifying repayment on verification of the acknowledgment of receipt of payment with an original document of proof of identity, address and signature and corresponding debit from the bank account of the company.

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