An expected regulatory order was issued by SEBI (The Securities and Exchange Board of India) to prohibit unregistered influencers or entities that give stock advice. Yes, you heard it right, SEBI has made it mandatory for the entities that give stock advice to register with the market regulator SEBI. In addition, the Securities and Exchange Board of India also banned seven people for allegedly violating the investment adviser norms related to offering stock market advice, from accessing public markets. This major announcement and order was announced by the market regulator SEBI on Wednesday, October 25, 2023. In the following sections, we have mentioned more details of this development. Keep reading this article and take a look below.
Reportedly this major announcement was made by the market regulator after it banned people who were allegedly giving stock advice and violating investment adviser norms. The accused is said to be running channels on social media under the name “Baap of Chart”. In addition, the market regulator also asked the accused to pay Rs17 crore that they allegedly gained for giving stock advice. The amount is said to be deposited in an escrow account and it will remain deposited until SEBI completes its investigation in it. However, it was a temporary order but a final order will be only given by SEBI after the probation is completed.
This decision of SEBI comes as a part of the trend in which it issues prohibitory orders against entities that are not registered but give investment advice through social media channels. In its 45-page prohibitory order, SEBI wrote, “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,”
The market regulator also found that influencer Baap of Charts was promising luring returns and conducting stock market courses and exposure to livestock markets. “Further, I note that in his videos/social media posts on ‘courses’ of Baap of Charts, Nasir frequently 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.” said Ananth Narayan, a full-time SEBI member.