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SEBI Hauls Up HBJ Capital For Misleading Investors And Bans It

Jun17th
201511 CommentsWritten by Arjun

HBJ Capital has landed itself into serious trouble with SEBI owing to repeated complaints from its clients. It has also contravened the law by collecting funds from investors and offering investment advice. SEBI has passed an order barring HBJ Capital from continuing its nefarious activities

HBJ Capital’s modus operandi for attracting clients was extremely simple. It played on the human emotions of greed and gullibility. Whenever a stock became a multibagger, HBJ Capital would release advertisements claiming to have discovered it. It also claimed that its subscribers were basking in great riches. HBJ also offered generous discounts to entice investors to join their services.HBJ Capital also ensured that it remained in the news by getting obscure organizations to give its “awards and recognition”. Among other, it claimed to have won the ‘Asia’s Most Promising Brand and leadership award’.

This gave HBJ Capital the much-needed credibility and respectability.

The strategy worked very well because investors flocked to it in droves. They not only joined its various schemes called “Hedge Fund Portfolio”, “Multibagger”, “Bulls Eye”, “The Millionaire Portfolio”, “Fortuna” etc but also pumped in large sums of money into its PMS.

However, having enticed the client to part with his money, HBJ lost the plot. It did not provide any service, and its stock recommendations resulted in huge losses, leaving its clients in a disgruntled state of mind.

One can see the outpouring of anger against HBJ Capital in these two posts (1) (2). The common complaint from investors is that “HBJ Capital Cheated Me”.

SEBI’s order dated 15th June 2015 acknowledges the fact that several complaints were received by it against HBJ Capital. It says:

“SEBI received several complaints inter alia alleging that they had subscribed to the various services/schemes offered by HBJ Capital, which offered huge returns. However, the company failed to provide the returns they promised and also failed to refund the money invested by the complainants”.

SEBI holds that “it is very evident that the activities of HBJ Capital and its directors of giving trading tips, stock specific recommendations, etc. to the investors on a contractual basis on payment of fees falls within the definition of activities of “investment adviser” as defined under Regulation 2(m) of the SEBI Investment Advisers Regulations. HBJ Capital and its aforementioned directors are engaged in providing investment advisory services to investors without obtaining necessary registration for the same as mandated by Section 12 (1) of the SEBI Act and Regulation 3(1) of the SEBI Investment Advisers Regulations.”

SEBI finds fault with HBJ Capital for having acted as investment advisers and alternative investment funds without obtaining registration from SEBI. It also notes that several complaints have been received against HBJ Capital alleging that HBJ Capital failed to provide the services promised by it and also failed to provide the returns promised. It is also alleged that HBJ Capital is not refunding the money invested by the investors/clients.

SEBI has expressed the apprehension that investors at large could be misled and the moneys invested by the investors are at risk on account of such unauthorized activities of unregistered entities.

SEBI has accordingly directed HBJ Capital Services Pvt. Ltd. and its Directors viz. Kumar Harendra, Amrita Singh, Abhishek Kumar Singh, Jitendra Kumar, Arunmozhi Gopalan and Ponnuraj Gokulraj “cease and desist from acting as an Investment Adviser and Alternative Investment Fund and cease to solicit or undertake such activities or any other unregistered activities in the securities market directly or indirectly, any manner whatsoever”. SEBI has also directed HBJ Capital and the persons above refererd to “immediately withdraw and remove all advertisements, representations, Literatures, brochures, materials, publications, documents, websites, etc. in relation to those schemes/activities (investment adviser and Alternative Investment Fund) or any unregistered activity in the securities market”.

Now, we have to see whether there is any chance for HBJ Capital’s clients to get back the hard-earned money that they entrusted to HBJ Capital.