SEBI Closes Case on Unregistered Advisory Firm; SSPFS cleared after investigation finds no evidence of client fraud

SEBI Closes Case on Unregistered Advisory Firm; SSPFS cleared after investigation finds no evidence of client fraud​

Regulatory Clarity Achieved as SEBI Disposes Proceedings Against Shree Sai Proficient Financial Services​

The Securities and Exchange Board of India (SEBI) has officially disposed of proceedings against Shree Sai Proficient Financial Services (SSPFS), proprietor Ms. Madhuri Garg, finding the allegations of unregistered investment advisory activities to be not tenable. The order concludes an extensive investigation initiated in response to complaints regarding promised assured returns to investors.

The original charges leveled against SSPFS included providing investment advice without requisite registration and promising guaranteed returns, violations that run contrary to the SEBI Act, 1992 and PFUTP Regulations. SEBI ultimately determined that there was a lack of material evidence establishing the Noticee’s involvement in advisory services for consideration.

The Complaint and Initial Allegations Against SSPFS​

The proceedings originated from complaints received via the SCORES Portal, one being filed by Mr. Shyamsundar Virmani, who alleged he paid ₹5 lakhs to SPRIA but never received promised returns. The investigation focused on the payment records linked through Easebuzz, where the bank account was held in the name of Shree Sai Proficient Financial Services (SSPFS).

During the course of the examination, it was observed that SSPFS was conducting business using a bank account registered with SSPFS details (PAN: CMSPG1119C) but serving clients related to SPRIA. This led to SEBI issuing a Show Cause Notice (SCN) on June 5, 2025, detailing the alleged violations.

Defense Rests on Outsourcing and Corporate Separation​

The core of SSPFS’s defense hinged on demonstrating that it was merely an administrative outsourcer for SPRIA—a registered entity. The Noticee asserted that all advisory activities undertaken by the complainant's account were executed by SPRIA, not SSPFS.

SSPFS submitted that its role was limited to non-core administrative support, such as human resource management and clerical work. The proprietor of SPRIA had opened the Axis Bank account, and although SSPFS’s name appeared on the bank opening form, all transactions in the account were carried out by the proprietor of SPRIA.

SEBI Findings Challenge Core Allegations​

SEBI's comprehensive review addressed the definition of an investment adviser—any person who for consideration is engaged in providing advice or holds themselves out as such. While SSPFS’s name appeared on the bank details provided by Easebuzz, the final order noted significant nuances regarding control and operation.

The regulatory body highlighted that the proprietor of SPRIA was the individual who had personally responded to complainants, assuring them refunds. This fact contradicted the allegations leveled against SSPFS alone. Furthermore, SEBI found insufficient evidence to prove that SSPFS conducted risk profiling or prepared suitability reports for any person.

Final Verdict: Proceedings Disposed Without Penalty​

In its final order, issued by Whole Time Member Amarjeet Singh, the SEBI addressed the core issues—whether SSPFS undertook unregistered investment advisory activities and whether it promised assured returns. The regulatory body answered both questions in the negative.

Acknowledging that the registered address for the communication linked to the bank account belonged to SPRIA, the Committee concluded that SSPFS was not in control of or operating the Easebuzz-linked Axis Bank account. Consequently, the allegation of promising assured returns could not be sustained. SEBI thus disposed of the proceedings against Shree Sai Proficient Financial Services without issuing any direction and imposed no monetary penalty.