Unregistered Investment Advisory Services Misled Investors: SEBI Orders Refund of ₹2.79 Cr [Read Order]

Rahul Dangi ,proprietor of MG and SIITS, faced two complaints filed with SEBI, one in July 2020 against MG and another in June 2023 against Star Infotech. The complaints alleged that his firms offered stock market tips with profit guarantees, collected money from clients, but either caused losses or failed to provide services.

In the first case, MGcharged Rs. 2,000 and allegedly traded in the complainant’s account, resulting in losses. In the second, Star Infotech collected over Rs. 1.5 lakh from the complainant in May 2023, promised Jackpot Calls and recovery of losses, but delivered poor service and later stopped responding. Screenshots of WhatsApp chats and emails confirmed the advisory tips and payment details.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

SEBI found that neither Rahul Dangi nor his firms were registered with SEBI. Their websites openly promoted investment tips and displayed pricing, testimonials, and services like intraday calls and future tips. Four linked bank accounts received around ₹2.79 crore between 2018 and 2024, mainly as advisory fees.

Despite SEBI’s notices in December 2021 and June 2024, Rahul Dangi and his firms did not respond. SEBI concluded that they had been running unregistered investment advisory services.

SEBI issued a Show Cause Notice on January 10, 2025, to Market Gainer and Star Infotech IT Solutions, both proprietary firms of Rahul Dangi, for offering stock market tips without SEBI registration. This violated Section 12(1) of the SEBI Act, 1992, and Regulation 3(1) of the SEBI (Investment Advisers) Regulations, 2013.

The notice, initially sent to addresses in Bhopal and Bangalore, was returned undelivered and later published in newspapers on April 10, 2025. Despite a public hearing notice on May 21, 2025, offering a hearing on May 28, 2025, there was no response or appearance by Rahul Dangi. SEBI proceeded ex-parte, treating the non-response as acceptance of the charges, citing past SAT rulings.

Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here

SEBI found that from January 2018 to March 2024, both entities had illegally provided investment advice and collected ₹2.79 crore from clients through websites, emails, WhatsApp, and direct messages. The funds were received in multiple bank accounts linked to Rahul Dangi and partly transferred to his personal account.

Based on the evidence, SEBI concluded that both firms operated as unregistered investment advisers and violated regulatory norms meant to protect investors. Since most of the funds were collected after March 8, 2019, SEBI invoked Section 15EB of the SEBI Act for the later violations and Section 15HB for earlier ones.

SEBI observed that Rahul Dangi had shown complete disregard for the law and misled investors through false claims and schemes like “Jackpot Call.” It held that such conduct endangered investor interests and market integrity.

Accordingly, SEBI decided to impose monetary penalties under Sections 15HB and 15EB, order refund of ₹2.79 crore to affected clients, and bar Rahul Dangi from accessing the securities market. SEBI highlighted that investment advisers must be registered and qualified to ensure investor protection, which was completely ignored in this case.

Step by Step Guidance for Tax Audit & E-filing, Click Here

SEBI passed an order against Rahul Dangi, proprietor of MG and SIITS, for running unregistered investment advisory services. SEBI directed him to refund all money collected from investors within three months and issue public notices in newspapers within 15 days to inform investors about the refund process.

The refund was to be done through traceable banking channels. Rahul Dangi was barred from selling any assets or withdrawing funds from bank accounts except for refund purposes. After completing the refunds, a Chartered Accountant-certified report was to be submitted to SEBI within 15 days after four months of the public notice.

Any unclaimed balance was to be deposited with SEBI and kept in an escrow account for one year, after which the remaining funds would go to SEBI's Investor Protection and Education Fund.

In case of non-compliance, SEBI stated it would initiate recovery under Section 28A of the SEBI Act. MG, SIITS, and Rahul Dangi were also prohibited from accessing or dealing in the securities market for five years or until the refund process was completed, whichever was later. They were further barred from offering investment advisory services unless registered with SEBI.

SEBI also imposed monetary penalties of Rs. 2 lakh and Rs. 3 lakh for violations before and after March 8, 2019. The penalty was to be paid within 45 days, and failure to do so would lead to recovery proceedings. Rahul Dangi was allowed to close any open derivative positions within three months or upon expiry. The order clarified that investors could still seek legal remedies elsewhere, and the order came into force immediately.

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates