The Securities and Exchange Board of India (SEBI) recently passed an order cracking down on unqualified social media influencers offering market tips, also known as ‘finfluencers’..In an elaborate 49-page order, SEBI directed those involved in running social media channels in the name of ‘Baap of Chart’ to refund ₹17.2 crore collected from unsuspecting individuals who bought courses on trading in Indian markets. SEBI also directed six individuals and a company to pay a penalty of over ₹30 lakh and debarred them from accessing the securities market for a period of six months to one year. The face of 'Baap of Chart', a person named Mohammad Nasir, has been slapped with a ₹15 lakh fine and banned from the securities market for a year. “The theatrics and showmanship in the trailer videos on YouTube issued by Md. Nasir/ BoC also appear to be aimed at creating illusion of unnatural returns by drawing in gullible and uninformed viewers to join his ‘classes’ thereby inducing them to trade in the securities market,” the SEBI order said. .SEBI and finfluencers:.SEBI mandates that any person wishing to give investment advice must be qualified and registered under the Investment Adviser Regulations (IA Regulations), 2013. With the advent of social media, SEBI noticed that unqualified persons, calling themselves ‘finfluencers’, were giving out investment advice. In November 2022, the market regulator announced that it was framing rules to govern the growing base of financial influencers on social media, with the intention of strengthening the regulation of tips by unregistered persons.SEBI’s noted that these unregistered persons first buy shares of a company through trading accounts and circulate favourable messages about those scrips through social media among their thousands of subscribers. When the subscribers are induced into purchasing those shares, the prices are driven up. The finfluencers then sell their pre-acquired shares, pocketing large amounts of profits for themselves, while subscribers may not reap the same benefits.In August 2024, SEBI implemented implemented stricter regulations for registered intermediaries in the capital markets. The primary aim was to curb the rise of unregistered investment advisors, particularly those operating online.The new rules prohibit registered intermediaries from associating with entities that provide investment advice without proper authorisation. This includes referring clients to unregistered advisors or partnering with entities that make claims about investment returns or performance.SEBI's move was designed to protect investors from fraudulent activities and to ensure transparency in the financial markets. By restricting associations with unregistered entities, the regulator aims to prevent misleading advice and unauthorised fund mobilisation..The Baap of Chart case.SEBI investigated Mohammad Nasir (known as "Baap of Chart" or BoC) for allegedly offering unregistered investment advisory services between January 1, 2021 and July 7, 2023. Nasir promoted himself on social media platforms like YouTube and Twitter, claiming to offer educational courses on stock trading. These courses, hosted on platforms such as Bunch Microtechnologies, were marketed as providing strategies for high returns, often with promises of sureshot profits. Payments for these courses were directed to accounts linked to Nasir and Golden Syndicate Ventures.SEBI found that Nasir provided explicit buy/sell recommendations through private groups and online interactions, making his activities akin to investment advisory services. These actions violated Section 12(1) of the SEBI Act and related regulations, as he was not registered to provide such services. Nasir and GSVPL collected over ₹17 crore through these activities, luring clients with misleading claims of high success rates, which were contradicted by Nasir's personal trading losses.SEBI also noted that disclaimers on Nasir's websites about not providing financial advice were ambiguous and seemed to mask regulatory violations. Additionally, directors and shareholders of GSVPL, including Rahul Rao and others, were found to have directly or indirectly benefited from these unregistered advisory activities. SEBI concluded that these actions involved fraud, manipulation and unregistered operations, violating multiple provisions of the SEBI Act and related regulations..SEBI issued an interim order and show cause notice on October 25, 2023, against Nasir, GSVPL,and others, for alleged unregistered investment advisory activities. These activities were found to prima facie violate Section 12(1) of the SEBI Act, 1992, and Regulation 3(1) of the SEBI (Investment Advisers) Regulations, 2013, which require registration for offering investment advice.In this order, SEBI issued various directions to address these violations, aiming to protect investor interests and uphold market integrity. The accused parties were asked to cease such activities and respond to the notice to explain why further regulatory action should not be taken against them.The order passed on December 3 confirmed the interim order. It stated,“It is concluded that while Nasir was the face of BoC and provided investment advice, even though he was not registered with SEBI, the others aided and abetted Nasir in the business of unregistered investment advisory services and directly or indirectly collected fees/ amounts from ‘clients / students/ investors.’”SEBI further found that BoC, under the garb of ‘educational courses’/ ‘strategies’, was providing investors with investment advisory services and luring them with false and misleading claims. SEBI also found that Nasir also concealed the losses made by him in the securities market in his own account. According to SEBI, the fact that Nasir made losses by trading in the securities market meant that he was aware that it is impossible to deliver such returns. Despite this, he made false promises of unrealistic assured returns using trading strategies were made to investors/clients. Thus, the market regulator not just penalised the Nasir and others, but also directed them to refund the amount they had collected from the public for courses..[Read order]
The Securities and Exchange Board of India (SEBI) recently passed an order cracking down on unqualified social media influencers offering market tips, also known as ‘finfluencers’..In an elaborate 49-page order, SEBI directed those involved in running social media channels in the name of ‘Baap of Chart’ to refund ₹17.2 crore collected from unsuspecting individuals who bought courses on trading in Indian markets. SEBI also directed six individuals and a company to pay a penalty of over ₹30 lakh and debarred them from accessing the securities market for a period of six months to one year. The face of 'Baap of Chart', a person named Mohammad Nasir, has been slapped with a ₹15 lakh fine and banned from the securities market for a year. “The theatrics and showmanship in the trailer videos on YouTube issued by Md. Nasir/ BoC also appear to be aimed at creating illusion of unnatural returns by drawing in gullible and uninformed viewers to join his ‘classes’ thereby inducing them to trade in the securities market,” the SEBI order said. .SEBI and finfluencers:.SEBI mandates that any person wishing to give investment advice must be qualified and registered under the Investment Adviser Regulations (IA Regulations), 2013. With the advent of social media, SEBI noticed that unqualified persons, calling themselves ‘finfluencers’, were giving out investment advice. In November 2022, the market regulator announced that it was framing rules to govern the growing base of financial influencers on social media, with the intention of strengthening the regulation of tips by unregistered persons.SEBI’s noted that these unregistered persons first buy shares of a company through trading accounts and circulate favourable messages about those scrips through social media among their thousands of subscribers. When the subscribers are induced into purchasing those shares, the prices are driven up. The finfluencers then sell their pre-acquired shares, pocketing large amounts of profits for themselves, while subscribers may not reap the same benefits.In August 2024, SEBI implemented implemented stricter regulations for registered intermediaries in the capital markets. The primary aim was to curb the rise of unregistered investment advisors, particularly those operating online.The new rules prohibit registered intermediaries from associating with entities that provide investment advice without proper authorisation. This includes referring clients to unregistered advisors or partnering with entities that make claims about investment returns or performance.SEBI's move was designed to protect investors from fraudulent activities and to ensure transparency in the financial markets. By restricting associations with unregistered entities, the regulator aims to prevent misleading advice and unauthorised fund mobilisation..The Baap of Chart case.SEBI investigated Mohammad Nasir (known as "Baap of Chart" or BoC) for allegedly offering unregistered investment advisory services between January 1, 2021 and July 7, 2023. Nasir promoted himself on social media platforms like YouTube and Twitter, claiming to offer educational courses on stock trading. These courses, hosted on platforms such as Bunch Microtechnologies, were marketed as providing strategies for high returns, often with promises of sureshot profits. Payments for these courses were directed to accounts linked to Nasir and Golden Syndicate Ventures.SEBI found that Nasir provided explicit buy/sell recommendations through private groups and online interactions, making his activities akin to investment advisory services. These actions violated Section 12(1) of the SEBI Act and related regulations, as he was not registered to provide such services. Nasir and GSVPL collected over ₹17 crore through these activities, luring clients with misleading claims of high success rates, which were contradicted by Nasir's personal trading losses.SEBI also noted that disclaimers on Nasir's websites about not providing financial advice were ambiguous and seemed to mask regulatory violations. Additionally, directors and shareholders of GSVPL, including Rahul Rao and others, were found to have directly or indirectly benefited from these unregistered advisory activities. SEBI concluded that these actions involved fraud, manipulation and unregistered operations, violating multiple provisions of the SEBI Act and related regulations..SEBI issued an interim order and show cause notice on October 25, 2023, against Nasir, GSVPL,and others, for alleged unregistered investment advisory activities. These activities were found to prima facie violate Section 12(1) of the SEBI Act, 1992, and Regulation 3(1) of the SEBI (Investment Advisers) Regulations, 2013, which require registration for offering investment advice.In this order, SEBI issued various directions to address these violations, aiming to protect investor interests and uphold market integrity. The accused parties were asked to cease such activities and respond to the notice to explain why further regulatory action should not be taken against them.The order passed on December 3 confirmed the interim order. It stated,“It is concluded that while Nasir was the face of BoC and provided investment advice, even though he was not registered with SEBI, the others aided and abetted Nasir in the business of unregistered investment advisory services and directly or indirectly collected fees/ amounts from ‘clients / students/ investors.’”SEBI further found that BoC, under the garb of ‘educational courses’/ ‘strategies’, was providing investors with investment advisory services and luring them with false and misleading claims. SEBI also found that Nasir also concealed the losses made by him in the securities market in his own account. According to SEBI, the fact that Nasir made losses by trading in the securities market meant that he was aware that it is impossible to deliver such returns. Despite this, he made false promises of unrealistic assured returns using trading strategies were made to investors/clients. Thus, the market regulator not just penalised the Nasir and others, but also directed them to refund the amount they had collected from the public for courses..[Read order]
