SEBI Confirms ₹5 Lakh Penalty on Unregistered Investment Advisor Amid Fraudulent Guarantees

SEBI Confirms ₹5 Lakh Penalty on Unregistered Investment Advisor Amid Fraudulent Guarantees​

Regulatory Action Against Safe Trading Proprietor​

The Securities and Exchange Board of India (SEBI) has issued a Final Order confirming a significant penalty against Mr. Mohit Gupta, proprietor of Safe Trading. The decision relates to illegal unregistered investment advisory activities, where the Noticee had collected funds from investors by fraudulently assuring guaranteed returns. This stringent action follows a review mandated by the Securities Appellate Tribunal (SAT).

The SEBI order specifically targets violations related to unregistered operation and fraudulent practices under the PFUTP Regulations. Earlier directives included mandating the refund of INR 23,94,574.50 received from investors, alongside debarment from accessing the securities market for one year or until repayment is filed.

Reconsideration of Section 15HA Penalty​

The matter came before SEBI after the SAT directed a reconsideration solely on the imposition of the INR 5,00,000 penalty under Section 15HA of the SEBI Act. The Noticee contended that the penalty was disproportionate and discriminatory, citing instances where similar unregistered advisors were issued only warning letters or faced charges under lesser sections (Section 15HB or 15EB).

However, the Quasi Judicial Authority found that the claims regarding proportionality lacked merit. Citing legal precedent from cases like Classic Credit Ltd. vs. SEBI, the authority concluded that ignorance of the law is no excuse in matters of regulatory compliance. Therefore, Mr. Gupta was held liable for violating PFUTP Regulations and consequently liable for the penalty under Section 15HA.

Non-Compliance Cited as Aggravating Factor​

A key finding noted by SEBI related to the Noticee's failure to comply with previous directives. Despite having been directed to refund investors, Mr. Gupta failed to adhere to the stipulated process. SEBI had advised him, via email dated February 03, 2026, to open an ESCROW account for depositing the refundable amount as mandated by the QJA order dated March 27, 2025.

This deliberate conduct of non-compliance was deemed a significant aggravating factor in assessing the penalty. While finding it sufficient to impose the minimum monetary penalty, SEBI noted that this failed compliance heightened the seriousness of the charges against him.

Final Penalty and Directions Issued​

Ultimately, the QJA upheld the imposition of the INR 5,00,000/- (Rupees Five Lakh Only) under Section 15HA of the SEBI Act. The final order reinforces that statutory penalties stand irrespective of arguments concerning "negative equality" or other cases.

Mr. Mohit Gupta has been directed to remit or pay the said penalty amount within a period of forty-five (45) days from the date of receipt of this order. The payment must be made through the online facility available on www.sebi.gov.in. This final order is effective immediately, and copies have been distributed to recognized Stock Exchanges and Depositories.