Sebi’s Crackdown On Unregistered ‘Finfluencers’: Key Measures By The Regulator

As part of its ongoing efforts to curb the rise of unregistered investment advice, the Securities and Exchange Board of India (Sebi) has removed over 70,000 misleading online posts and accounts since October 2024, Sebi's whole-time member Ananth Narayan said on Friday.

“A common worry for all of us is the menace of unregistered investment advisors/research analysts, who are cashing in on the rising interest in investments,” Narayan said while addressing the Association of Registered Investment Advisors (ARIA) summit in Mumbai.

Lately, Sebi has launched a crackdown on social media influencers (finfluencers) promoting dubious stock tips, often at the expense of unsuspecting retail investors. This move aims to protect investors from unverified and potentially harmful financial advice.

A report by the CFA Institute, released earlier this month, found that 82 per cent of investors influenced by social media have acted on advice from finfluencers, with 72 per cent reporting profits. However, only two per cent of these influencers are Sebi-registered, raising concerns about misinformation and lack of regulation. Alarmingly, eight per cent of investors reported being misled or scammed, with this figure rising to 14 per cent for those over 40.

The CFA Institute’s analysis of 51 major Indian finfluencers revealed troubling findings: 33 per cent provide stock recommendations despite lacking formal credentials, while 63 per cent fail to disclose sponsorships, misleading followers about paid promotions. Additionally, only 29 per cent mention key investment norms such as fees and tax implications, leaving investors unaware of potential risks.

Financial Experts Or Frauds?

According to the regulator, many financial influencers, or finfluencers, lure victims through online trading courses, misleading testimonials, and false promises of guaranteed returns. In recent months, Sebi has banned and fined several such finfluencers.

Asmita Patel (She-Wolf of Stock Market)

One high-profile case involved YouTuber and finfluencer Asmita Patel, who was banned for allegedly running unregistered investment advisory services through her institute, Asmita Patel Global School of Trading.

Patel, who calls herself the 'She-Wolf of the Stock Market' and 'Options Queen,' allegedly amassed Rs 104 crore through her institute under the pretense of providing educational content. According to Sebi, those who subscribed to her courses were misled by exaggerated profit promises and pressured into paying high fees for minimal or ineffective trading education.

Sebi's inspection also revealed that Patel's trading school and associated entities provided buy-and-sell stock recommendations via social media platforms like Telegram without proper registration. This violates Sebi's regulations, which mandate that investment advisory services be officially registered.

In response, Sebi banned Patel and her affiliated entities from accessing the securities market. The regulator also seized Rs 53.6 crore of the illicit funds and directed Patel to justify the handling of the remaining amount. Additionally, all promotional content related to her unregistered investment advisory services was ordered to be removed from public platforms.

Nasiruddin Ansari (Baap of Chart)

Early last year, Sebi also banned Mohammad Nasiruddin Ansari, known as 'Baap of Chart,' from the securities market and ordered him to return Rs 17.2 crore in illegal gains made under the pretense of providing stock market training.

The regulator investigated Nasir’s activities across various social media platforms between January 1, 2021, and July 7, 2023, to determine whether he was offering unregistered investment advisory services. Sebi found that Nasir promoted himself as a stock market expert, luring investors into paying for educational courses that promised guaranteed profits if followed.

Nasir also offered these courses through a website and app linked to Bunch Microtechnologies Pvt. Ltd., where he collected enrollment fees and provided access to his lessons. He also gave buy-and-sell recommendations in private groups. The funds collected from these courses were transferred to the bank accounts of Nasir, his company Baap of Chart, and Golden Syndicate Ventures Pvt. Ltd., where he and another shareholder, P. Rahul Rao, hold significant stakes.

Ravindra Balu Bharti

Another major case involved Ravindra Balu Bharti, who operated an institute named Ravindra Bharti Education Institute, which was not registered with Sebi. He had amassed over 2 million followers across two YouTube channels and allegedly leveraged his massive following to offer investment advice and stock recommendations.

Sebi’s investigation revealed that Bharti and his company engaged in deceptive practices, targeting inexperienced investors by offering unregistered investment advice and stock recommendations.

Bharti and his company, along with three others—Shubhangi Ravindra Bharti, Rahul Ananta Gosavi, and Dhanashri Chandrakant Giri—have been banned from participating in the securities market until April 4, 2025. The regulator also fined them Rs 9.5 crore for violating its rules.

Sebi’s Latest Measures To Tackle Unregistered Advisory

In response to this growing concern, Sebi, in consultation with social media platforms like Google and Meta, has mandated that all Sebi-registered intermediaries must register on these platforms using the email addresses and mobile numbers linked to Sebi's SI Portal. The platforms will then verify the intermediaries before allowing them to upload or publish advertisements.

Accordingly, Sebi has advised all registered intermediaries wishing to publish ads on these platforms to update their contact details (email and mobile number) in Sebi’s SI Portal by April 30, 2025.

The regulator has also proposed the 'Payright' initiative, a unique UPI handle for Sebi-registered intermediaries, to ensure that investors transfer funds only to legitimate entities and to prevent fraud.