1. Securities and Exchange Board of India (hereinafter referred to as SEBI) vide Order dated January 02, 2004 directed Delta Alliance Financial Services having its office at 34/3, Ashok Nagar, 3^rd Floor, NSC Bose Road, KOLKATA � 700 040 and its proprietor Shri Rajeev Kapoor to cease and desist from acting as an unregistered Portfolio Manager and from accepting deposits and managing the portfolio of investors and also from publishing any advertisements luring the investors to invest in securities market. Further, vide the said order, Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor were also restrained from buying, selling or dealing in securities market in any manner, directly or indirectly.
2. It appeared that Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor did not comply with the directions issued vide SEBI�s Order dated January 02, 2004 in the matter of their dealing as unregistered portfolio manager, accepting deposits from the investors and issuing advertisements alluring the investors to invest in securities market. In view of the same, vide order dated April 08, 2004 SEBI appointed Shri S.V. Krishna Mohan as Adjudicating Officer to inquire into and adjudge under section 15(HB) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as SEBI Act), the alleged violation committed by Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor. The Adjudicating Officer issued a show cause notice no. A&E/528A/04 dated June 30, 2004 under Rule 4 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as the "Rules") to the entities. The said notices were returned undelivered. Subsequently the said notice was affixed on the premises of the entities and the report in respect of the same was witnessed by 2 persons in terms of the provisions of Rule 7(C) of the Rules. It is noted that Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor did not reply to the aforesaid show cause notice.
3. I was appointed as Adjudicating Officer in the place of Shri S.V. Krishna Mohan vide SEBI�s Order dated September 30, 2004. Though it was noted that the said entities did not reply to the show cause notice issued to them, in the interest of the justice it was felt that an opportunity of hearing may be granted to them and vide letter dated October 06, 2004 the entities were advised to appear for the personal hearing scheduled on October 19, 2004. Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor failed to attend the hearing scheduled on October 19, 2004. However, vide letter dated October 21, 2004, one more opportunity of hearing was granted to them and the parties were advised to appear for the personal hearing on October 30, 2004.
4. Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor did not attend the hearing scheduled on October 30, 2004. As the parties have not appeared for the personal hearing despite two opportunities granted to them, and further as the entities have not replied to the notice issued to them, the inquiry is proceeded with in the absence of Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor.
5. The allegation against Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor is that they have failed to comply with the directives of SEBI issued vide SEBI�s Order dated January 02, 2004 in the matter of their dealing as unregistered portfolio manager, accepting deposits from the investors and issuing advertisement luring the investors to invest in the securities market. SEBI vide its order dated January 02, 2004 directed Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor to cease and desist from acting as an unregistered Portfolio Manager and from accepting deposits from and managing the portfolio of investors and also from publishing any advertisements luring the investors to invest in securities market. Further, vide the said order, Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor were also restrained from buying, selling or dealing in securities market in any manner, directly or indirectly.
6. It is noted that earlier, SEBI had come across certain advertisements placed in news papers by Delta Alliance Financial Services owned by Shri Rajeev Kapoor which indicated that it was engaged in the activity of a portfolio manager without registering itself with SEBI. The advertisements had assured returns ranging from 60% to 138% annually, which prima facie, appeared to be exaggerated and was intended to lure a large number of unsuspecting investors. The advertisements also indicated that investors would authorise Delta Alliance Financial Services to execute transactions of buying and selling of securities on their behalf and to operate their internet online trading accounts giving the Delta Alliance Financial Services their password and ID both on equity and derivatives market.
7. As the Delta Alliance Financial Services and Shri Rajeev Kapoor were not registered with SEBI under any capacity under the Regulations of SEBI, and the intention of these entities appeared to be to lure unsuspecting investors to part with their money for securities market, with promises of very high returns, SEBI in exercise of its powers under Sections 11, 11B and 11D of the SEBI Act, 1992; issued necessary directions against Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor . SEBI had issued the directions against these entities as a preventive measure and to obviate the possibility of members of the public getting lured by these advertisements.
8. It is alleged that subsequent to the directions dated January 02, 2004, Delta Alliance Financial Services had advertised in Ananda Bazaar Patrika on January 18, 2004 offering Portfolio Services. The advertisement was intended to lure general public to earn daily profit in shares investment through Delta Alliance Investments. The said advertisement was given in the name of Delta Alliance Investments. The contents of this advertisement were similar to the advertisements issued by the Delta Alliance Financial Services earlier in Economic Times on November 28, 2003 and December 08, 2003. As it appeared that Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor acted in defiance of SEBI�s Order dated January 02, 2004, in the show cause notice dated June 30, 2004, Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor were required to explain as to why an inquiry should not be held against them for non compliance of the directions dated January 02, 2004 issued by SEBI against them and also why penalty should not be imposed on them under Section 15 HB of the SEBI Act, 1992 for the said violation. Delta Alliance Financial Services and its proprietor have not replied to the show notices issued to them. Further, though Delta Alliance Financial Services and Shri Rajeev Kapoor were granted an opportunity of personal hearing on two occasions i.e., on October 19, 2004 and October 30, 2004, they failed to attend the personal hearing granted to them.
9. It is noted from the advertisement dated January 18, 2004 appeared in Anand Bazaar Patrika that the same is similar to the earlier advertisements issued by the Delta Alliance Financial Services in Economic Times on November 28, 2003 and December 08, 2003. It is noted that both Delta Alliance Financial Services and Delta Alliance Investments are having same address and telephone numbers. Further, the words �Delta Alliance� appearing in the advertisement dated January 18, 2004 is printed in similar manner as in the case of previous advertisements released by Delta Alliance Financial Services. From the above facts, it can be concluded that the advertisement dated January 18, 2004 is issued by Delta Alliance Financial Services, in the name of Delta Alliance Investments. From the facts and circumstances of the case, it is evident that the advertisement was issued by Delta Financial Services to bypass the restraint order dated January 02, 2004 passed by SEBI against Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor. In this regard, it is pertinent to note that Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor did not reply to the show cause notice issued in the Adjudication Proceedings and also did not avail the opportunity of personal hearing granted to them. In view of the same, it is found that Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor failed to comply with the directions issued against them vide SEBI�s Order dated January 02, 2004. In this regard, Section 15 HB of the SEBI Act provides that "Whoever fails to comply with any provision of this Act, the rules, or regulations made or directions issued by the Board thereunder for which no separate penalty has been provided, shall be liable to a penalty which may extend to one crore rupees".

 

10. In view of the fact that Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor did not comply with the directions dated January 02, 2004 issued by SEBI under the provisions of Sections 11, 11B and 11D of the SEBI Act, they are liable to the penalty prescribed under Section 15HB of the SEBI Act.
11. The provisions of Section 15J of the SEBI Act and Rule 5 of the Rules require that while adjudging the quantum of penalty, the Adjudicating Officer shall have due regard to the following factors namely;

1. the amount of disproportionate gain or unfair advantage wherever quantifiable, made as a result of the default
2. the amount of loss caused to an investor or group of investors as a result of the default
3. the repetitive nature of the default

12. In this regard, it is noted that Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor through various advertisements assured high returns to the investor which prima facie appeared to be exaggerated claims with the intention to dupe investors. As the activities of Delta Alliance Financial Services was found to be detrimental to the interests to the investors and securities market, SEBI issued directions dated January 02, 2004 against them as a preventive measure. It is noted that even after the directions were issued by SEBI to Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor to cease and desist from acting as an unregistered portfolio manager and from accepting deposits from and managing the portfolio of investors and also publishing any advertisements luring the investors to invest in securities market, the entity had issued advertisement offering portfolio management services, luring investors to invest in securities. In this regard, though it is difficult to assess the amount of loss caused to the investors by the actions of the entity, it is pertinent to note that as Delta Alliance Financial Services is not registered with SEBI in any capacity, in case of default by the entity in meeting its obligations to the investors, the normal recourse available to the investors may not be available. Hence, dealing with such entities may put the investors in great peril. In this regard, it is also to pertinent to note that even after the directions dated January 02, 2004 issued by SEBI as a preventive measure, Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor continued to issue advertisements not complying with the directions issued by SEBI. Such willful non compliance of SEBI�s directions establishes blameworthy conduct of Delta Alliance Financial Services and its proprietor Shri Rajeev Kapoor.
13. ORDER

Cc: 1) Delta Alliance Financial Services

2) Securities and Exchange Board of India