Sebi cracks down on finfluencers; 'Baap of Charts' among 7 banned for up to 1 year

New Delhi: Intensifying its crackdown on finfluencers, markets regulator Sebi on Monday restrained seven entities, including Mohd Nasiruddin Ansari, who ran unauthorised investment advisory services in the name of 'Baap of Chart', for up to one year.

The regulator also directed the entities -- Nasiruddin Ansari, Rahul Rao Padamati, Tabraiz Abdullah, Asif Iqbal Wani, Golden Syndicate Ventures Pvt Ltd (GSVPL), Mansha Abdullah and Jadav Vamshi -- to refund Rs 17.2 crore within three months.

Ansari runs a profile on social media platform X (formerly Twitter) by the name of 'Baap of Chart' where he used to offer buy/sell recommendations in the stock market.

The recommendations were given in the garb of providing educational training related to the securities market, according to Sebi.

Additionally, the regulator slapped a penalty of Rs 20 lakh on Ansari, Rs 2 lakh each on Padamati, Tabraiz Abdullah, Wani, GSVPL, Mansha Abdullah, and Vamshi.

"In my view, unregistered investment advisors like Nasir can put investors at great risk by misleading them."

"Without holding any registered IA (Investment Advisory) certificate, Nasir, aided and abetted by the remaining noticees, provided investment advisory services and promised unrealistic returns to investors with the objective of raising money through course fees," Sebi's whole-time member Amarjeet Singh said in the final order.

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, false promises of unrealistic assured returns using trading strategies were made to investors/clients, Singh said.

The theatrics and showmanship in the trailer videos on YouTube issued by Md. Nasir/Baap of Chart 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, he added.

Sebi also found that Ansari was assuring returns, undertaken with an intent to influence the clients to purchase "educational courses' offered through Baap of Chart.

He (Ansari) also concealed the losses made by him in the securities market in his own account. Ansari has, therefore, indulged in fraudulent activity in violation of regulatory norms, Singh said.

Sebi also noted that Ansari, Padamati and GSVPL have failed to comply with the directions in the interim order on opening an escrow account and depositing the illegal proceeds therein. These being the proceeds of an illegal activity, are liable to be refunded to the respective clients of the noticees, Sebi said.

Therefore, Sebi concluded that while Nasir was the face of Baap of Chart and provided investment advice, even though he was not registered with Sebi, the remaining entities aided and abetted Nasir in the business.

The regulator also found that the noticees have collected Rs 17.20 crore as fees in respect of unregistered investment advisory activity and have violated the provisions of market norms and IA regulations.

Accordingly, Ansari has been banned from the securities market for a year and the six others have been banned for six months.

The present proceedings emanate from an interim order-cum-show cause notice issued on October 25, 2023, by Sebi against Ansari, GSVPL, Padamati, Tabraiz, Wani, Mansha, and Vamshi, as the unregistered investment advisory activities of the entities were prima facie found to be in violation of IA (Investment Advisers) norms and PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.