MEHSANA/ GUJARAT: Indian financial regulators and investigators say a network of unregistered investment advisory firms used the credibility of a single regulatory license to solicit money from small investors, diverting funds for personal use and triggering a widening money-laundering probe that has led to the seizure of gold, silver and cash worth several crores of rupees
A License Gap and a Regulatory Breach
According to findings cited by enforcement agencies, three private companies — Vishwas Stocks Research Pvt. Ltd., Dalal Stocks Advisory Pvt. Ltd. and Devki Stocks Pvt. Ltd. — did not possess certificates of registration from the Securities and Exchange Board of India (SEBI) to operate as investment advisers. Despite this, they were allegedly engaged in offering investment advice to the public.
Investigators said the firms sought to overcome this regulatory gap by tying up with Himanshu Bharatkumar Bhavsar, also known as Pintu Bhavsar, who held an individual SEBI-issued investment adviser certificate. During an investigation under the Prevention of Money-Laundering Act (PMLA), authorities concluded that this individual certificate was used for the benefit of the three companies, enabling them to conduct unregistered advisory activities in violation of regulatory norms.
SEBI, in its order, held the companies and their directors responsible for contraventions arising from the unauthorized provision of investment advisory services.
Building a Network to Attract Investors
The Enforcement Directorate (ED) said its investigation revealed that Bhavsar, described as the alleged mastermind, along with other accused persons, established multiple offices in Gujarat towns including Mehsana, Visnagar and Vadnagar. These offices, officials said, were set up with the specific purpose of attracting funds from the general public under the promise of stock market investments.
To expand their reach, the accused allegedly hired employees tasked with making regular phone calls to potential investors. These callers, investigators said, pitched stock market investments by promising higher-than-normal returns, a strategy aimed at drawing in small and first-time investors seeking quick profits.
Alleged Diversion of Funds and Expanding Cases
As per the first information report (FIR) that triggered the investigation, the complainant was persuaded to invest money in the stock market with assurances of substantial profits. The promised investments, however, were never made. Authorities allege that the funds were not deployed in shares of any company but were instead diverted for personal gain.
As the probe progressed, police registered at least six additional FIRs across different states, collectively involving an alleged fraud amount of approximately ₹10.87 crore. The ED initiated its case on the basis of an FIR lodged at Kheralu police station in Mehsana district under various provisions of the Indian Penal Code.
Seizures Under the Money-Laundering Law
Acting under the PMLA, the ED carried out searches and seizures in what it described as a “fraudulent stock market investment fraud with common investors.” From locations linked to the accused in Mehsana district, officials seized assets valued at more than ₹4 crore.
According to an official statement, the Ahmedabad Zonal Office of the ED recovered silver bullion weighing about 110 kilograms valued at ₹2.4 crore, gold bullion weighing roughly 1.296 kilograms valued at ₹1.7 crore, and silver jewellery weighing approximately 39.7 kilograms. Investigators also seized Indian currency equivalent to ₹38.8 lakh, foreign currencies valued at least ₹10.6 lakh, and various property-related documents connected to Bhavsar and others named in the case.
