Mumbai: An affidavit filed by the Securities and Exchange Board of India (SEBI) in the Bombay High Court recently says former India cricket captain Kapil Dev, who has a stake in the Indian Trading League (ITL) and is seen promoting ITL in advertisements, has not disclosed in the advertisements that he has a stake in the company.
As a result, SEBI’s affidavit filed last month says, it is perceived that he is misusing his celebrity status to draw clients to the company.
A Division Bench of Justices Shantanu Kemkar and Anuja Prabhudesai had asked SEBI to file a reply while hearing a writ petition filed by SAMCO Ventures Private Limited and others. The petition challenged a SEBI circular that restricted them from getting a celebrity to advertise for leagues floated by stockbrokers.
‘Rash trading decisions’
The affidavit, filed by an assistant general manager of the securities board, denies that the prime objective of the ITL is to encourage investors to take rational trading decisions. SEBI, Bombay Stock Exchange, National Stock Exchange and Multi Commodity Exchange of India say leagues such as the ITL would result in investors making rash and risky trading decisions because of the monetary incentives up for grabs. It says that like many other businesses, ITL is merely a tool to increase and promote the personal interest of the companies and not what is being portrayed.
The guidelines have been issued on account of inducement of clients, financial liabilities, grievance redressal and non-disclosure of material information. Under the last head, the affidavit reads, “Kapil Dev, was seen in various advertisements promoting the Indian Trading League. However, it was not disclosed that he had a stake in the parent company, SAMCO Ventures Pvt Ltd. Through M/s Kapil Dev Services, being a 10.79% shareholder is perceived to be misusing his celebrity status to lure clients towards SAMCO group companies while not disclosing, his personal interest.”
The two circulars being challenged were issued on August 11, 2016, where SEBI restricted celebrity advertisements for leagues by stockbrokers, and the BSE issued a press release saying it had not endorsed or approved the leagues, and participants could take part at their own risk. On November 3, 2016, SEBI issued another circular restricting SAMCO from associating with and carrying out a league that ranks traders and investors in securities.
The writ petition pleads that the actions by SEBI are illegal and violate Article 14 (equality before the law) and 19 (i) (g) (to practise any profession, or to carry on any occupation, trade or business) of the Constitution.
Despite numerous calls and text messages, Mr. Dev could not be reached for comment.
