SEBI cancels Capital Stroke adviser licence, orders 5-year ban

The Enforcement Action

The Securities and Exchange Board of India (SEBI) has cancelled the registration of Capital Stroke Investment Services Pvt. Ltd., a SEBI-registered investment adviser, and barred the firm from the securities market for five years. The direction is contained in a final order dated 15 October 2026 (order reference QJA/BS/WRO/WRO/32771/2026-27), passed by a Quasi Judicial Authority at SEBI's Mumbai office.

The firm held investment adviser registration number INA000001316. By the order, SEBI cancelled that certificate of registration and separately restrained the firm "from accessing the securities market" and from "buying, selling or otherwise dealing in securities", directly or indirectly, for five years. SEBI clarified that the period of restraint the firm has already served under an earlier interim order will be set off against the five-year term, in the interest of proportionality.

SEBI held that the firm promised assured returns to clients, misrepresented its research team and track record on its website, failed to act in a fiduciary capacity, and submitted forged documents to SEBI during an inspection. SEBI characterised parts of this conduct as fraudulent under its regulations.

The firm contested the allegations throughout. According to the order, it argued that its marketing language denoted a possibility rather than a guarantee of profit, that investor complaints had been closed and refunds processed, that no quantifiable investor loss had been established, and that a censure rather than cancellation would be proportionate. SEBI rejected these submissions and held the violations established.

How the Scheme Worked

The matter traces back to a SEBI inspection of the firm conducted from 3 to 6 November 2020, covering the period 1 April 2019 to 22 September 2020. According to the order, the inspection drew on investor complaints, screenshots of the firm's website, emails sent to clients and call recordings.

SEBI found that the firm "promised assured returns to its clients despite knowing that all investments in the securities market are subject to market risk". The order records that the firm made false and misleading claims about its research team, its advisory services, its performance and its accuracy, and that testimonials shown to prospective clients were proven to be false. SEBI held that disclaimers the firm relied upon reached clients only after they had committed and paid, and so did not displace the finding that the prospect of assured profit was used to attract clients.

The order describes a sequence of further practices. SEBI found that the firm charged advisory fees from the same clients on multiple occasions, before the tenure of a previous service had ended, and charged fees that were arbitrary or exceeded those stated on its website. It found that the firm failed to communicate assessed risk profiles back to clients, did not make mandated disclosures, and ran free trials for prospective clients contrary to a SEBI circular.

SEBI also held, on a preponderance of probabilities, that the firm was complicit in the unregistered advisory activity of an entity described in the order as "Green Wealth", which it found had used the firm's investment adviser registration number, with two of the firm's three directors receiving funds from that entity. SEBI noted it had earlier, by an order dated 28 October 2022, issued directions against a person it named in the separate Green Wealth matter.

On the forged-documents allegation, SEBI agreed with its Designated Authority that the firm submitted forged documents during the inspection. The firm denied this, attributing a common file-creation date to the compression of bulky files for email and differences in invoice numbering to its CRM platform.

The procedural history set out in the order is lengthy. SEBI issued an interim ex-parte order on 27 August 2021 and a confirmatory order on 8 June 2022. A pre-enquiry show-cause notice followed on 16 April 2024, the Designated Authority submitted an enquiry report on 29 August 2025 recommending cancellation, a further show-cause notice was issued on 5 January 2026, the firm replied on 23 February 2026, and a personal hearing was held on 24 April 2026.

The Law Invoked

The final order was passed under Section 12(3) of the SEBI Act, 1992, read with Regulation 27 and Regulation 35 of the SEBI (Intermediaries) Regulations, 2008. Section 12(3) empowers SEBI to suspend or cancel the registration of an intermediary; the Intermediaries Regulations set out the enquiry and action procedure.

On the misrepresentation and assured-returns findings, SEBI held that the firm violated Regulations 3(a), (b), (c) and (d), 4(1) and 4(2)(k), (o) and (s) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (the PFUTP Regulations), read with Section 12A(a), (b) and (c) of the SEBI Act, and that the conduct was fraudulent within Regulation 2(1)(c) of the PFUTP Regulations. These provisions prohibit deceptive and manipulative dealing in securities.

On the advisory-conduct findings, SEBI held the firm breached the SEBI (Investment Advisers) Regulations, 2013, including Regulation 15(1), which requires an adviser to act in a fiduciary capacity and in the best interests of clients; Regulation 16(e), on risk profiling; Regulation 18(6), on disclosures, read with the Code of Conduct; and Regulation 3(1), on the involvement in unregistered advisory activity.

What Happens Next

SEBI's order takes effect immediately, and copies were directed to be served on the firm, on BSE Limited as the investment adviser administration and supervisory body, and on the recognised stock exchanges and depositories.

A final order of this kind, passed by a SEBI quasi-judicial authority, is appealable. The standard route is an appeal to the Securities Appellate Tribunal (SAT), ordinarily to be filed within 45 days of receipt of the order, with a further appeal on a question of law to the Supreme Court. These are regulatory findings reached after SEBI's own proceedings; they can be tested, and set aside or upheld, on appeal. The firm's registration remains cancelled and the market ban in force unless and until a tribunal or court directs otherwise.

The order also records that a monetary penalty of 10 lakh rupees had earlier been paid in connection with the matter by the firm, which told SEBI the payment was made for commercial prudence and was not an admission of guilt.

What It Means

For retail investors, the most practical lesson in this order is how to verify an adviser before paying for tips. SEBI maintains a public register of investment advisers, and the exchanges and SEBI's own portal allow anyone to check whether a name, firm and registration number match. In this matter SEBI found that another entity had used the firm's registration number, a reminder that a registration number quoted in a pitch should be checked against the official register, not taken on trust.

The order is also a clear statement on assured returns. SEBI's finding that promising assured profit while markets remain subject to market risk can amount to fraudulent conduct goes to the heart of a common sales tactic. Any adviser, channel or "SEBI-registered" tipster guaranteeing returns is, on SEBI's reasoning here, a warning sign rather than a selling point. Fine-print disclaimers delivered only after payment, the order notes, do not cure such a promise.

Finally, the order shows the limits of after-the-fact fixes. The firm argued that it had refunded disputed amounts and closed complaints, but SEBI held that resolving complaints did not neutralise the underlying conduct. Investors who feel mis-sold should still complain through SEBI's SCORES platform, since a closed complaint and a regulatory finding are not the same thing.

FAQ

What exactly did SEBI order against Capital Stroke?

SEBI cancelled the firm's investment adviser registration (number INA000001316) and barred it from the securities market for five years, by a final order dated 15 October 2026. The period of restraint already served under an earlier interim order is to be set off against the five years.

Are these findings the same as a criminal conviction?

No. These are SEBI's own regulatory findings, reached under the SEBI Act and its regulations after a show-cause and enquiry process. They are appealable to the Securities Appellate Tribunal and, on a question of law, to the Supreme Court. A tribunal may uphold, modify or set them aside. The firm contested the allegations throughout.

Can the order be appealed?

Yes. A SEBI final order can be challenged before the Securities Appellate Tribunal, ordinarily within 45 days of receipt, with a further appeal to the Supreme Court on a question of law. Until then, the cancellation and the five-year market ban stand.

How can I check if my adviser is genuinely registered?

Use SEBI's public list of registered investment advisers and match the exact name and registration number. In this case SEBI found another entity had used the firm's registration number, so verify the number against the official register rather than accepting it from a brochure, message or caller.

What should I do if I was promised assured returns?

Treat a guarantee of profit as a red flag; SEBI's order treats promising assured returns, while markets remain subject to risk, as potentially fraudulent. If you believe you were mis-sold an advisory service, lodge a complaint on SEBI's SCORES platform and keep records of what was promised and what you paid.

This report is based on the official SEBI final order dated 15 October 2026 in the matter of Capital Stroke Investment Services Pvt. Ltd., published on SEBI's enforcement orders page.