Sebi fines ~10 lakh in WhatsApp investmentadvisory scam

Markets watchdog Sebi has imposed a penalty of ~10 lakh on two individuals for providing unregistered investment advisory services through WhatsApp messages.

A probe conducted by the Securities and Exchange Board of India (Sebi) found that “trading tips” were being offered to investors through WhatsApp messages by two individuals — Mansoor Rafiq Khanda and Firoz Rafiq Khanda — while promising guaranteed returns. They were providing such investment advisory services without obtaining registration from the Sebi. According to the Sebi, the two individuals appear to have solicited and induced investors through WhatsApp and websites to deal in securities on the basis of their investment advice and stock trading tips and also guaranteed unrealistic returns.

It is possible that some gullible investors could be easily lured by the contents mentioned through such messages, it noted.

“I conclude that the noticees carried out unregistered investment advisory services and are in violation of ...IA (Investment Advisor) regulation. “I conclude that activities carried out by the noticees have violated provisions of ... the PFTUP (Prohibition of Fraudulent and unfair Trade Practices) regulations,” Sebi Adjudicating Officer Sangeeta Rathod said in an order dated November 28.

Accordingly, the regulator levied a fine of ~10 lakh on the Khandas.

In October 2016, Sebi had ordered impounding unlawful gains of over ~5 crore from Khandas and their associated firms. The regulator, in an interim order in June 2014, had asked these individuals as well as their associated companies to cease and desist from acting as investment advisors and not to solicit or undertake such activities or any other unregistered activity in the securities market.