Sebi scolds Baap of Chart and demands ₹17 crore be placed in escrow

 Sebi scolds Baap of Chart and demands ₹17 crore be placed in escrow

New Delhi: On Wednesday, the Securities and Exchange Board of India (Sebi) prohibited seven individuals from entering public markets on the grounds that they had violated investment advisor guidelines by providing stock market advice via Telegram groups.

The accused, who operated social media accounts under the moniker "Baap of Chart," have also been requested to place the ₹17 crore they allegedly received in exchange for investment advice in an escrow account, where it will remain until the markets regulator wraps up its investigation. This is a provisional order, and Sebi will issue a final confirmation order when the investigation is finished. This incident is a part of a bigger trend in which unregistered finfluencers utilizing social media to provide financial advice are facing prohibitory orders from Sebi.

I am convinced that, given the case's factual matrix and the initial finding of fraudulent and unregistered investment advisory activities, it would be more practical to pass interim directions against Noticee Nos. 1, 2, and 5, among other things to stop any further fraudulent or unregistered activities in the best interests of investors and to impound and retain the quantified alleged illegal gains," wrote Ananth Narayan, a full-time Sebi member, in the 45-page order. Sebi also noticed that Baap of Charts was offering exposure to live stock markets and large profits on his stock market courses.

Furthermore, I see that Nasir often highlights granting access to live trading during his classes in his videos and social media postings on the "courses" offered by BoC. Consequently, the interests of investors and the securities market would suffer irreversible harm if non-interference were to occur at this point."

Social media's introduction has led to a sharp increase in the supply of illicit stock advice in markets. According to Sebi regulations, any organization providing these stock advice must register with the watchdog. On the other hand, a lot of unofficial social media profiles have begun providing stock market advice. Sebi has increased the requirements for investment advisers in reaction to this. It has made it illegal for listed businesses and intermediaries governed by Sebi to employ these unregistered finfluencers.

Sebi has also intensified regulatory action against these businesses in a separate manner. A similar decision was given by Sebi in April, requiring the administrators of a Telegram group to pay a fine of ₹5.6 crore.

Speaking at a market event last month, Madhabi Puri Buch, the chairperson of Sebi, warned investors to be wary of the various performance claims being made by financial advisors on social media platforms. She also mentioned that some of these advisors were offering their clients portfolio management services (PMS) that were not legal.