Sebi whips Baap of Chart, asks to deposit ₹17 crore in escrow

The accused, who ran social media channels based on the name ‘Baap of Chart’, have also been asked to deposit ₹17 crore they allegedly collected for giving investment advice to be deposited in an escrow account until the markets regulator concludes the probe. This is a temporary order, and a final confirmation order will be issued by Sebi once the probe concludes. The development is part of a larger trend where Sebi is issuing prohibitory orders against unregistered finfluencers who were using social media channels to give investment advice.

“Considering the factual matrix of the case and the prima facie conclusion of fraudulent and unregistered investment advisory activities, I am convinced that the balance of convenience lies in passing interim directions against the Noticee Nos. 1, 2 and 5 inter alia for preventing the continuation of any further fraudulent or unregistered activities in the interest of investors, and for impounding and retaining such quantified alleged illegal gains,” said Ananth Narayan, whole-time member Sebi in the 45-page order. Sebi also observed that Baap of Charts was conducting stock market courses and promised tall returns and exposure to live stock markets.

“Further, I note that in his videos/social media posts on ‘courses’ of BoC, Nasir repeatedly emphasizes providing access to live trading during his courses. Therefore, non-interference at this stage would result in irreparable injury to the interests of the securities market and the investors.”

Markets have witnessed a steep rise in illegal stock advice with the advent of social media. Sebi rules say any entity giving such stock tips needs to be registered with the regulator. However, many unregistered social media accounts have been offering stock market tips. In response to this, Sebi has tightened the norms for investment advisors. It has prohibited listed companies and Sebi-regulated intermediaries from hiring such unregistered finfluencers.

Separately, Sebi has also ramped up regulatory action against such entities. In April, Sebi passed another similar order where admins of a Telegram Group were asked to pay ₹5.6 crore fine.

Speaking at a market event last month, Sebi chairperson Madhabi Puri Buch said investors need to be cautious about various performance claims being floated by investment advisors on social media platforms adding that some of investment advisors were providing illegal portfolio management service(PMS) to their clients.

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Updated: 26 Oct 2023, 12:39 AM IST