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Journalism of Courage
Continuing its efforts to rein in so-called ‘finfluencers’ — Internet influencers who provide financial advice and recommendations to ordinary investors — the markets regulator Securities and Exchange Board of India (SEBI) on Wednesday (October 25) barred Mohammad Nasiruddin Ansari, who owns a firm called ‘Baap of Chart’, from buying, selling, or dealing in the securities market.
On the pretext of providing educational training related to the securities market, Ansari was allegedly giving stock recommendations through social media platforms to investors, with a promise of guaranteed returns. SEBI also ordered Ansari to pay back Rs 17.2 crore which he had made by allegedly “misleading investors and influencing them to deal in securities”.
Ansari is the sole proprietor of the firm Baap of Chart (BoC). He promoted himself as a stock market expert on various social media platforms, and invited investors/ clients to enrol for various “educational courses” offered by him. He allegedly promised gullible investors near-certain returns or profits if they followed his recommendation/ advice to invest in the securities market.
How did Ansari work?
SEBI found that Ansari was providing stock recommendations (buy/ sell) through BoC on various social media platforms such as YouTube, X (formerly Twitter), Instagram, WhatsApp, and Telegram. He asked investors to enroll for his “educational courses” offered through a website and apps available on Google Play and Apple’s App Store, on a platform provided by Bunch Microtechnologies Pvt Ltd (Bunch).
Ansari was selling 19 courses relating to the securities market, including four that promised investors assured returns, SEBI said. Through a chat functionality available on the Bunch platform, students connected with “tutors” who shared information/ documents/ content, and communicated in real time, SEBI found. The investigation also found that Ansari provided buy/ sell recommendations in private groups of his investors/ clients.
The amounts collected from investors were credited into the bank accounts of Ansari, BoC, Golden Syndicate Ventures Pvt Ltd (a company in which Ansari is a significant shareholder) and P Rahul Rao (anotheconomier significant shareholder of Golden Syndicate Ventures). SEBI named four other directors of Golden Syndicate Ventures: Asif Iqbal Wani, Tabraiz Abdullah, Mansha Abdullah and Vamshi Jadhav, who were also allegedly involved in unregistered investment advisory activities. Money was credited to the accounts of these four individuals as well, the regulator said.
The YouTube channel of Ansari (@Baapofchart) has more than 4.43 lakh subscribers and more than 7 crore views. He also operates a Telegram group/ channel called Baap Of Chart Option Hedging, which has around 53,000 subscribers. The Instagram and X accounts of ‘baapofchart’ have around 59,000 and 78,000 followers respectively, SEBI said. His WhatsApp channel has more than 13,000 followers.
Ansari continued to give buy/ sell recommendations to members until the first week of October 2023, SEBI said. Besides providing educational courses online, Ansari also organised physical workshops in various cities to educate investors about the securities market.
The SEBI investigation found Ansari collected Rs 13.78 crore from courses/ workshops listed on Bunch’s platform and mobile apps. “The complete amount is considered as fees received from fraudulent and unregistered investment advisory activities,” SEBI said.
In addition, Rs 3.42 crore was collected through two UPI IDs linked to Ansari’s and BoC’s accounts in Kotak Mahindra Bank. The UPI IDs were publicised on the website and social media handles, the regulator said.
“…Noticees have collected an amount of Rs 17.2 crore during the period January 2021-July 2023 by luring clients/ investors through misleading/ false information to purchase his courses/ workshops, adding them in their closed groups and inducing/ influencing them to deal in securities,” SEBI said.
So what exactly has SEBI said?
In its interim order, SEBI accused Ansari/ BoC of having gone to great lengths to describe their advisory activity as being educational in nature. “The theatrics and showmanship in the trailer videos on YouTube issued by Ansari/ BoC appear to be aimed at creating an illusion of unnatural returns by drawing in gullible and uninformed viewers to join his ‘classes’ thereby inducing them to trade in the securities market,” SEBI said.
“Prima facie, at its very core, the impugned activity is fraudulent. It appears that the Noticees sought to make a quick buck by inducing persons to invest in the securities market making bogus claims and assurances of astronomical profits if trades are executed relying on their advice/ recommendations,” the regulator said.
In order to protect the interests of investors and the integrity of the securities market, SEBI has asked Ansari and others to “cease and desist” from acting as or holding themselves out to be investment advisors, whether using ‘Baap of Chart’ or otherwise.
It has restrained Ansari, Rahul Rao, and Golden Syndicate Ventures from buying, selling or dealing in securities either directly or indirectly, and to deposit Rs 17.2 crore in an escrow account with a scheduled commercial bank within 15 days.
What is the lesson for investors?
Investors should be careful while taking advice from investment advisors online. They should only deal with advisors who have obtained a certificate of registration from SEBI. In order to safeguard investors’ interests, SEBI has laid down specific conditions for registration of investment advisors, their educational qualifications and code of conduct. Currently, there are 1,313 SEBI-registered investment advisers.
