The Securities and Exchange Board of India has reduced a recovery demand against Ramesh Babu from Rs 60.94 lakh to just Rs 410. After a fresh review ordered by the Securities Appellate Tribunal, the regulator concluded that most bank credits were unrelated to unregistered investment advisory services. Babu has been ordered to deposit the Rs 410 to refund a single complainant, and his bank account will be de-frozen.
The Securities and Exchange Board of India (SEBI) has significantly reduced its recovery demand against Ramesh Babu, an individual who was previously accused of conducting investment advisory services without the required registration. Following a directive from the Securities Appellate Tribunal (SAT) for a fresh hearing, the regulatory authority revised the penalty from Rs 60.94 lakh down to Rs 410.
Review Clears Suspicious Transactions
The regulator's re-examination of the case, led by Quasi-Judicial Authority Santosh Shukla, found insufficient evidence to establish that Mr. Babu acted as an investment adviser. An analysis of 890 separate credit entries into his bank account, which were previously suspected to be proceeds from unregistered services, proved to be legitimate. These transactions included salary payments, personal transfers, cashback, interest income, and proceeds from freelance work and gift-card trading. The regulator found no evidence that these funds were payments for financial advice.
Connection to Investocare and Yatender Singh
The case originally surfaced in May 2023, when SEBI issued an interim order against Investocare Financial Research, its proprietor Ravish Kandhari, and Mr. Babu, alleging they were involved in unregistered advisory activities. However, the latest review highlighted that Mr. Babu operated an IT and digital marketing business and was, in part, a victim of losses linked to Investocare.
Investigations showed that Yatender Singh, an employee of Investocare, had persuaded Mr. Babu to open a trading account under a profit-sharing arrangement. When the trading activities resulted in losses, Mr. Singh allegedly facilitated payments into Mr. Babu's account to cover these losses and digital marketing fees. During this time, Mr. Singh shared Mr. Babu’s bank account details with a third-party complainant, which resulted in three UPI transactions totaling Rs 410. SEBI has now determined that this specific amount must be returned to the complainant, but the broader charges against Mr. Babu have been dropped.
Next Steps for the Account Holder
With the charges of violating the Investment Advisers Regulations withdrawn, the regulator has directed the de-freezing of Mr. Babu's bank account. He has been given a 45-day window to deposit the Rs 410 with the regulator to complete the refund process for the affected complainant. This order concludes the regulatory proceedings against him, as the authority granted him the benefit of doubt regarding his involvement in the alleged advisory scheme.