In its continued efforts to regulate the activities of 'finfluencers,' who are online influencers providing financial advice to the general public, the Securities and Exchange Board of India (SEBI) took action against Mohammad Nasiruddin Ansari, the proprietor of 'Baap of Chart', on Wednesday (25 October). He was prohibited from engaging in any securities market transactions.
SEBI also issued a directive for Ansari to reimburse the sum of Rs 17.2 crore, which he had reportedly accumulated through what SEBI deemed as "misleading investors and influencing them to engage in securities trading," Indian Express reported.
What Ansari did?
Ansari, being the sole proprietor of 'Baap of Chart' (BoC), presented himself as a stock market expert on various social media platforms and encouraged investors and clients to enroll in various "educational courses" offered by his firm. Allegedly, he made promises to investors of nearly certain returns and profits if they followed his stock investment advice.
SEBI's investigation revealed that Ansari disseminated stock recommendations (buy/sell) via BoC on various social media platforms, including YouTube, X (formerly Twitter), Instagram, WhatsApp, and Telegram.
He urged investors to register for his "educational courses," available on Google Play and Apple's App Store through a platform provided by Bunch Microtechnologies Pvt Ltd (Bunch).
Ansari offered 19 courses related to the securities market, including four that guaranteed returns, according to SEBI. Through the Bunch platform's chat feature, students connected with "tutors" who shared information, documents, and content, engaging in real-time communication.
The investigation also discovered that Ansari provided buy/sell recommendations within private groups of his investors and clients.
A teacher who himself was the loser
Baap of Chart was revealed to be a significant loser in the stock market. According to an analysis by the SEBI, Baap of Chart, along with its proprietor Ansari, incurred substantial losses of nearly Rs 3 crore over a span of 2.5 years, from January 2021 to July 2023, due to trading activities in the stock market.
Despite Ansari's assertions of offering trading strategies promising 200-300 percent profit or near-assured returns, his individual trading record shows a net loss of Rs 2,89,60,828.02, Money Control reported.
This fact, concealed from investors in his videos, workshops, and groups, contradicts the claim of certainty or near-certainty regarding returns on his trading recommendations and "educational videos."
As per the information provided to SEBI, Baap of Chart and Ansari maintained seven trading accounts, with most trading conducted through just two of them. He suffered a loss of Rs 2.64 crore from trading via his Zerodha trading account and an additional Rs 25 lakh from his Angel One trading account.
The funds collected from investors were deposited into the bank accounts of Ansari, BoC, Golden Syndicate Ventures Pvt Ltd (a company in which Ansari held a significant share), and P. Rahul Rao (another major shareholder of Golden Syndicate Ventures).
SEBI also identified four other directors of Golden Syndicate Ventures: Asif Iqbal Wani, Tabraiz Abdullah, Mansha Abdullah, and Vamshi Jadhav, who were allegedly involved in unregistered investment advisory activities. Funds were credited to the accounts of these individuals as well.
Baap of Chart had a substantial online presence with over 4.43 lakh subscribers and more than 7 crore views on Ansari's YouTube channel (@Baapofchart). He also managed a Telegram group/channel called "Baap Of Chart Option Hedging," with around 53,000 subscribers.
His Instagram and X accounts, 'baapofchart,' had approximately 59,000 and 78,000 followers, respectively, according to SEBI. His WhatsApp channel boasted more than 13,000 followers.
Ansari continued to provide buy/sell recommendations to members until the first week of October 2023, SEBI reported. In addition to offering online educational courses, Ansari conducted physical workshops in various cities to educate investors about the securities market.
Financial Gains SEBI's investigation revealed that Ansari had collected Rs 13.78 crore from courses and workshops listed on the Bunch platform and mobile apps. This entire sum was considered fees received from fraudulent and unregistered investment advisory activities, according to SEBI.
Additionally, Rs 3.42 crore was collected through two UPI IDs linked to Ansari's and BoC's accounts at Kotak Mahindra Bank. These UPI IDs were publicised on the website and social media profiles.
The total amount collected by Ansari and his associates from January 2021 to July 2023 was Rs 17.2 crore, obtained through luring clients and investors with misleading or false information to purchase courses and workshops. They were then added to exclusive groups and influenced to engage in securities trading, as per SEBI.
In an interim order, SEBI accused Ansari and BoC of making extensive efforts to portray their advisory activities as educational. SEBI suggested that the theatrical and promotional aspects of the trailer videos on Ansari's YouTube channel aimed to create an illusion of extraordinary returns, enticing uninformed viewers to join his classes and trade in the securities market.
SEBI stated that, prima facie, the core of the impugned activity was fraudulent, with the Noticees attempting to profit quickly by inducing individuals to invest in the securities market, making exaggerated claims and assurances of substantial profits by following their advice.
To safeguard the interests of investors and maintain the integrity of the securities market, SEBI has instructed Ansari and others to cease and desist from acting as or presenting themselves as investment advisors, whether using 'Baap of Chart' or any other means.
SEBI has imposed restrictions on Ansari, Rahul Rao, and Golden Syndicate Ventures, prohibiting them from participating in securities transactions directly or indirectly. They are also required to deposit Rs 17.2 crore in an escrow account held by a scheduled commercial bank within 15 days.
For investors, it is essential to exercise caution when seeking advice from online investment advisors. It is advisable to engage with advisors who have obtained a certificate of registration from SEBI. SEBI has established specific conditions for the registration of investment advisors, including requirements for their educational qualifications and a code of conduct. Currently, there are 1,313 SEBI-registered investment advisers.
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