SEBI recently passed an order against the owner of RGM Research. The promoter of this firm used to provide paid advisory services such as stock trading tips, client-specific personalized investment portfolios etc. without being registered as an investment advisor with SEBI.
The person who complained was promised to quadruple his money in 45 days. Falling for this trap, the person transferred Rs. 1.75 lakhs for advisory services and Rs. 2.50 lakhs into the account opened with the firm. In total, around Rs. 23 lakhs were transferred to the bank accounts of this firm by various persons who fell into their trap.
SEBI in the order has asked to refund the money received from any such investors, as fees or consideration within three months from the date of the order coming into effect. Along with freezing bank accounts and barring the promoter of this form from markets for 6 months.
This is not the first time SEBI has passed such an order and passed a similar one in January this year, where a group of Telegram channel operators posed as research analysts and used the channel for a pump and dump scheme.
“SEBI’s definition of an investment advisor as given in Regulation 2(1)(m) of the IA Regulations, 2013 provides as follows: “investment adviser means any person, who for consideration, is engaged in the business of providing investment advice to clients or other persons or group of persons and includes any person who holds out himself as an investment adviser, by whatever name called;”
“investment advice means advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products, whether written, oral or through any other means of communication for the benefit of the client and shall include financial planning: Provided that investment advice given through newspaper, magazines, any electronic or broadcasting or telecommunications medium, which is widely available to the public shall not be considered as investment advice for the purpose of these regulations;”
In the past few years, with rising social media consumption, there has been an exponential rise in people providing stock tips. And most of these guys aren’t even registered with SEBI as investment advisors. There’s no doubt that people providing tips on social media should come under greater scrutiny, given the influence these people can have.