Unregistered Investment Advisory: SEBI Orders Divinecommodity.co's Madhav Tiwari To Refund ₹17.48 Lakh

The Securities and Exchange Board of India (SEBI) has recently directed Madhav Tiwari, proprietor of Divinecommodity.co, to refund money to investors after finding that he had carried out investment advisory activities without registration.

SEBI had earlier, in September 2024, passed an order against Tiwari for providing investment advisory services without registration. It held that Tiwari had misrepresented himself as a SEBI-registered advisor, collected funds from investors, and fraudulently assured guaranteed returns, in violation of the SEBI Act and allied regulations.

The regulator had directed him to refund Rs 1.70 crore collected from investors, barred him from accessing the securities market for a period of two years from the date of the order or until filing of the repayment report, whichever was later, and imposed monetary penalties.

Tiwari challenged the order before the Securities Appellate Tribunal (SAT), limited to the issue of quantification of the refund, contending that SEBI had wrongly included income from his other businesses. Accepting this limited challenge, SAT directed SEBI to re-quantify the amount collected towards unregistered investment advisory services after giving Tiwari an opportunity to explain each entry in his bank statements.

Pursuant to this direction, SEBI granted personal hearings to Tiwari. According to him, only ₹9.66 lakh was collected as advisory fees during FYs 2020–21, 2021–22 and 2022–23, and the remaining payments reflected in his bank accounts were towards services other than investment advisory.

However, SEBI's Quasi Judicial Authority, Biju S, found that the invoices and ledgers produced by Tiwari did not adequately support his claim that the payments received were towards services other than unregistered investment advisory activities. SEBI further observed that, apart from merely asserting that certain entries were loan transactions, Tiwari failed to produce any supporting documents such as loan agreements, sanction letters, or proof of interest payments to establish their genuineness.

After examining the bank statements, SEBI identified several payments that clearly indicated investment advisory services, including amounts that exactly matched the prices of subscription plans advertised on Tiwari's website.

On this basis, it held that, “based on preponderance of probability, [the entries] establish a logical nexus between such entries and the amounts collected by the Noticee from his unregistered investment advisory activities.”

Accordingly, SEBI re-quantified the income earned by Tiwari from unregistered investment advisory activities at Rs 17.48 lakh and directed him to refund the said amount to investors within three months, issue public notices detailing the refund process, and comply with reporting requirements. The regulator also restrained him from selling his assets except for the purpose of effecting refunds.