SEBI imposes ban and penalties on Mohammad Nasiruddin Ansari for deceiving investors through misleading financial advice on social media.
Free advice, much like a 'no-cost' tip, often comes with hidden costs. And when it comes to giving unsolicited financial advisory on social space, it isn’t just your pocket but trust as well that gets played with. It took some time for our financial custodians to realize that retail investors’ vague attention is the biggest note for fin-influencers. And now SEBI is all set to break this link to protect investors' interests.
In its ongoing endeavors to regulate 'finfluencers,' involved in dispensing financial guidance and counsel to the general public, the market watchdog took action on Wednesday, October 25. SEBI has imposed a prohibition on Mohammad Nasiruddin Ansari, the proprietor of a company named 'Baap of Chart,' preventing him from participating in activities such as purchasing, selling, or transacting within the securities market.
The Ban on Ansari
Promoting himself as a proficient stock market expert across various social media platforms, Mohammad Nasiruddin Ansari faced allegations of enticing investors with promises of assured profits. Alongside the prohibition, Ansari has been mandated to reimburse a sum of Rs 17.2 crore, which he acquired by deceiving investors and persuading them to partake in securities trading.
Operations of 'Baap of Chart'
Mohammad Nasiruddin Ansari is the sole proprietor of 'Baap of Chart' (BoC), where he portrayed himself as a stock market specialist providing educational resources about the securities market. However, after sometime it came to light that he was dispensing stock advice, both for buying and selling, through various social media channels, including YouTube, X, Instagram, WhatsApp, and Telegram. He extended an opportunity to investors to join "instructional programs" on a platform managed by Bunch Microtechnologies Pvt Ltd. On this platform, he marketed 19 courses pertaining to the securities market, with four of them making commitments of guaranteed returns.
Through those interactive courses, people interacted with "mentors" for real-time information sharing. Ansari gave buy/sell advice in private investor groups, with funds distributed among Ansari, BoC and Golden Syndicate Ventures Pvt Ltd (where Ansari holds a significant stake). SEBI also named four other Golden Syndicate Ventures directors involved in unregistered investment advisory activities.
Financial Gains and SEBI's Findings
Following SEBI's investigation, it was revealed that Ansari accumulated Rs 13.78 crore through courses and workshops offered on Bunch's platform and mobile apps. This entire amount was categorized as fees generated from unregistered and deceptive investment advisory activities. Furthermore, an additional sum of Rs 3.42 crore was obtained through two UPI IDs associated with Ansari and BoC, held at Kotak Mahindra Bank, which were promoted via their website and social media channels. In total, from January 2021 to July 2023, Ansari and 'Baap of Chart' managed to attract Rs 17.2 crore by enticing clients and investors with misleading information to purchase courses and workshops, enrolling them in exclusive groups, and influencing them to partake in securities trading.
In its provisional ruling, SEBI accused Ansari and 'Baap of Chart' of deceptively presenting their advisory services as educational. They employed theatrical YouTube videos to create an illusion of remarkable profits, attracting unsuspecting viewers to participate in Ansari's courses. These activities were labeled as fraudulent, aimed at profiting by convincing people to invest in the securities market through unfounded claims of substantial gains. SEBI's actions are part of ongoing efforts to regulate financial influencers on social media and protect investors.
Since the inception of this year, SEBI has been pushing out stricter compliance for financial influencers. Earlier this year PR Sundar, a renowned YouTuber and trader, faced allegations by SEBI for violating investment norms. However, it is crucial to understand that much responsibility comes on retail investors to not give in to the fraudulent claims made by fininfluencers because free advice, like 'no-cost' tips, may drain your pockets in disguise before you even realize.