Fake pnl of live trading: Finfluencers scam

[nithin]

@Sleepy_Weasel

@nithin really appreciate the time and effort you have taken to communicate with us all on these questions thank you so much really appreciate it … also I think you should have some dedicated podcast on this from your end as we can relate so much with small small things you have spoken about …given the new challenges we are facing currently when it comes to day trading would love to hear more from you on this

Ah yeah, we have kind of lost out on this video content game. We have some plans, and you will start seeing something from our end soon. I think we need folks who can share their market views without any agenda; our job is to provide a platform for such folks.

[nithin]

@Algo_Mint

F&O income is classified as business income and not trading/speculative for taxation purpose. If that’s the case, why is it considered as financial income? Moreover underwriting options is more like running an insurance business with all the settlement obligations taken care by Clearing member unlike the insurance business. Even insurance companies don’t require NBFC registration with RBI. If so, I don’t think NBFC licence is required. RBI 50-50 rule is not applicable here. Please correct me if you think I’m wrong.

Hmmm… No, it is applicable. You can go ask any decent chartered accountant or law firm. They will tell you the same. I know many companies who have received notices for having only trading income and for not being an NBFC.

[nithin]

@shantveer_s

So, What if this amount is capped to a limit , so that the luring of the customers is limited and doesn’t affect the marketing people who actually work hard to bring in customers.

With any such rules, people will end up gaming it. Have multiple accounts through which referral happens, etc. The only solution is what the SEBI consultation paper suggests.

[Kathiresh_Nadar]

Hi @Nitin

Regarding the finfluencers, it seems even zeordha verified can be faked. Take a look at this link.

Verified P&L - Zerodha

As per the details Jan 6 , 2022 is the most profitable day. But when i am verifying the trade on that date, its no where as per the trade log.

Symbol	Qty.	Buy avg.	Buy value	Sell avg.	Sell value	Gross realised P&L
BANKNIFTY2210635700PE	25200	12.94	3,26,027.50	640.23	1,61,33,794.99	+1,58,07,767.50 +4,848.60%

Can you confirm is this is fake or not.

Thanks

[nithin]

@Kathiresh_Nadar

As per the details Jan 6 , 2022 is the most profitable day. But when i am verifying the trade on that date, its no where as per the trade log.

We have never had any issues with our P&Ls. This could be one of those contracts that was let to expire. 6th Jan 2022 is an expiry day.

It cannot be fake, as this is on our P&L page.

[jashjacob]

@Kathiresh_Nadar

when i am verifying the trade on that date, its no where as per the trade log.

How are you verifying this trade on this date?

[Ugemuge]

Hi,

Long time lurker and avid follower of verified by sensibull since the genesis - actively been posting these just to support the underlying philosophy and the vision this was brought ahead with

I constantly see people spending soo much money on courses, tips etc to just eventually come around and then again lose money in the markets, it pains me and sometimes its borderline insane the amount of creativity and ingenuity that some of these finfluencers use

for instance a certain channel on YouTube has their millions of viewers very slyly believing that they are affiliated with Zerodha and makes them use his referral code to sign up. he very smartly creates this illusion without incriminating or making it obvious. its crazy - every time support flags him he makes it seem like he’s some partner and you guys personally email him etc, creates a whole spectacle out of it. sad reality but he really leverages that to gather his audiences.

SO SO Glad you’ve come out to talk about this

Ive had an Opinion: Every mentor or trainer should provide a verified track record. this should somehow be mandated, via policy and better enforcement frameworks.

Issues:

1. Secrecy surrounds track records. People aren’t comfortable revealing exact numbers - Solution: Adopt “Zero Knowledge proofs” from theoretical science. Prove track record without revealing specifics. I mean it’s a long shot since its such a theoretical thing - but ive pondered upon whether these can be applied to this problem . maybe it’ll take the genius of you and Dr. K to solve this

2. Micro communities of gullible individuals arise, unaware of scams. Solution: Mandate industry-wide awareness, akin to banks’ security protocols. Brokers can play a key role.

Thanks
Shreyas

[RSCA]

Hey Nithin

How do you really define finfluencers ?

I know a few social media fames with really large base (10Mn+) of followers (mostly lower base of the pyramid), not into trading themselves, not educated or experiened in finance.

Wrote a book on stock market, made it a hype thru own channels and paid marketing, sold a hell lot of copies, thereafter further made crores with their referral links of brokerage account opening with the same users.

There are ways and means of fooling people. How do we save ppl from these?

[Algo_Mint]

I have consulted many CAs and companies Kanakupillai and Enterslice who provide services related to NBFC registration. They said it’s not required. I was in the process of applying NBFC licence for my company and approached these consultants. They charge around 8L for NBFC registration. Despite that they advised me it’s not required. Do you know any law firm that can I can consult?

[Chirag1]

Thanks for replying in context although you saw that the 2 posts weren’t directed to you

Ppl generally expect knee-jerk reactions but that is always like patch work. There has to be a wholistic approach considering all cases when trying to fix these things because the crooks are always trying to outsmart the system and find ways to circumvent the regulations.

As I heard last month RA / IA licenses will be for hire

[Chetan_Malhotra]

Hi !! I think Feb nse circular say that finfluencer with 10 lac plus follower cannot advertise broker. Nse registration is must for referal.plz clarify ?
.no referal earners take up client problem with broker ? . I mean they don’t take any accountability . Is it fair to pay such huge amount of commision without any accountability.? Earlier sub broker used to represent client problem with broker. What your view on that ?

[Kathiresh_Nadar]

I am taking based on the expiry date of the contract. I am considering them to be intraday trades.

[jashjacob]

@Kathiresh_Nadar

considering them to be intraday trades.

Have you cross-checked the options data for that option?

[nithin]

@RSCA

There are ways and means of fooling people. How do we save ppl from these?

Why I started my post saying this.

@nithin

The first and most important thing to remember about trading is that making money from trading is extremely hard. In the long run, less than 1% make returns above a bank FD. If anyone including influencers claims that they can help you get rich quick, they are mis-selling.

The reason why shady people who sell courses, stock tips, unauthorized portfolio management services, and useless financial products exist is because people believe making money from trading is easy, the crux of the problem.

This mis-selling is nothing new, it has existed in various forms throughout human history and the markets. But today, the internet has increased the audience for those wanting to earn a quick buck by mis-selling. Also in the physical world, there is usually no proof when someone mis-sells, but in the online world, it leaves a trail that can blow up like now.

This is the only way. We need everyone out there constantly educating as many and setting the right expectations from the markets.

[nithin]

@Algo_Mint

I have consulted many CAs and companies Kanakupillai and Enterslice who provide services related to NBFC registration. They said it’s not required. I was in the process of applying NBFC licence for my company and approached these consultants. They charge around 8L for NBFC registration. Despite that they advised me it’s not required. Do you know any law firm that can I can consult?

@TAXIQ.IN do you want to answer this query?

[nithin]

@Chetan_Malhotra

Hi !! I think Feb nse circular say that finfluencer with 10 lac plus follower cannot advertise broker. Nse registration is must for referal.plz clarify ?
.no referal earners take up client problem with broker ? . I mean they don’t take any accountability . Is it fair to pay such huge amount of commision without any accountability.? Earlier sub broker used to represent client problem with broker. What your view on that ?

None of these folks openly advertise for any broker. So in a way, they are not really advertising. They usually have an affiliate link somewhere in the description of the video, along with everything else. This is one of those things in the grey area currently. My guess is with everything that has happened over the weekend, there will be clarity on this soon. Again a regulatory framework that enforces everyone.

[Baji_shaik]

Sir I have a suggestion regarding it, consider to give star rating on profiles depending on consistency of profitable financial years, it will be unique feature and best for profitable traders and followers
Ex: last 2yr profitable 2 star
If last 3yr profitable 3 star
Minimum return on trading 20% per year on capital deployment

Please nithin sir, reply on possibilities of it

[nithin]

@Baji_shaik

Sir I have a suggestion regarding it, consider to give star rating on profiles depending on consistency of profitable financial years, it will be unique feature and best for profitable traders and followers
Ex: last 2yr profitable 2 star
If last 3yr profitable 3 star
Minimum return on trading 20% per year on capital deployment

Ah no. Star rating and all will be too much .

We are working on launching equity curve on Console that can show up in Verified P&L that will give you an idea of % returns over long periods of time.

[nithin]

We have been discussing this internally and what better we can do. One of the issues we have seen is people cherry-picking a custom date range to display P&L.

So starting tomorrow, all Verified P&L links will no longer have any custom date ranges. Any user sharing the Verified P&L page can only select the last 30 days, 90 days, 180 days, 360 days. This verified P&L can either be kept live or not. By live, it means that end of every day, the verified P&L page will be up to date for the last whatever time period selected.

What is Verified P&L and how to use it?

See point 6. We have a custom date range or number of days. We will only have the last # of days going forward.

[Chirag1]

@nithin wonderful to see the active commitment whenever issues come

Is there a technical reason for limiting to 360 days? Longer the better right? atleast 2 years option?