Trainers Who Lure Gullible Investors with Fake Trading Profits Need To Be Made Accountable
In the past few days, thousands of angry traders have been spewing vitriol about several high-profile trainers who, it is alleged, have consistently made false claims about their trading prowess to lure gullible investors into buying their online trading courses or open brokerage accounts from which they make crores of rupees as referral fees. How serious is the issue? Or are angry investors just looking for someone to blame as they slowly realise the truth of a study released by the market regulator early this year, which showed that 90% of active traders dabbling in derivatives trading had lost money in 2021-22 (Read: 90% of Traders May Lose in the F&O Casino, but Here Is Why the Casino Will Only Get Bigger?)
 
The Indian capital market has seen an unprecedented boom in the past three years as tens of millions of new investors entered the stock market with the sole objective of making quick money. Given the hunger for information and quick trading expertise, many self-styled experts with just a few years of market experience found a money-making opportunity in offering stock market trading courses that charge anywhere between Rs4,000 and Rs60,000. 
 
These trainers often rely on strategies unrelated to their actual trading skills or knowledge. The swagger to project themselves as successful traders with fraudulent claims of humungous profits, social media proficiency and tech-savvy are tactics that help promote their training courses while also generating income via broker affiliations and influence peddling.
 
Some of these YouTubers have garnered millions of followers, all desperate for quick riches, but three years is a long time for someone who has lost a lot of money, so the hype, lies and fakery are slowly being exposed from within. A vigilante action of sorts by a group of individuals has exposed the fact that two trainers, who claimed to make huge profits due to their superior trading skills, have actually been hiding losses on derivative trading. It is further alleged that they have been violating rules by offering trading tips to subscribers on subscriber-only social media groups without obtaining registration with Securities and Exchange Board of India (SEBI) as investment advisers. The tips have also led to serious losses, triggering an outpouring of anger against trainers and demand for investigation and regulation of their activities.
 
These developments are all part of today’s reality. The reach and spread of social media ensures that every activity and its misuse blows up and peaks with lightning speed, leaving the market regulator struggling to catch up, let alone regulate these activities. Intriguingly, the first call for regulation and disciplinary action has come from saner voices within the industry. 
 
Industry Vigilantes
Algo Trading: Readers would recall that, in July 2021, I wrote about how the SEBI did not feel the need to regulate retail algos, even though insiders as well as exchanges wanted regulation to protect retail investors (Read: Why Is SEBI Reluctant To Regulate Retail Algos?).
 
More importantly, although an algorithm is a computer-coded investment strategy, it is not subject to any regulation, unlike registered investment advisers;  algo writers were also getting away with false promises of extraordinary returns. Some were also running portfolios for clients, further violating established rules.
 
It is only in September 2022 that SEBI got a little tough on dubious deals between algo-writers and brokers (Read: SEBI Warns Brokers To Refrain from Mis-selling Algo Trading Strategy or Services Using Inflated Claims). Unfortunately, many algo writers continue to run illegal portfolio management services by ‘managing’ hundreds of trading accounts for investors, despite SEBI’s warning to brokers.
 
Fin-Influencers: The obvious next target was financial influencers, who peddled any product or service for a price on social media platforms. Here, too, SEBI has been talking about regulation since November 2022 but only got around to releasing a consultation paper after industry insiders were goaded into conducting a ‘sting’ to establish the lack of ethics in the industry and how they are only focused on their payments (Read: Manufacturing Reputations: A Sting Operation on the World Fin-influencers).
 
SEBI has proposed a model that aims to disrupt the revenue model of fin-influencers by mandating that registered intermediaries route payments through a neutral platform, making them accountable. But this will not cover non-registered trainers and the illegal advisories and portfolio management services that they run. (Read: Manufacturing Reputations: A Sting Operation on the World Fin-influencers)
 
Trainers and the Need for Regulation: 
On 29th August, a set of investors (Shreyas Bandi, Zubare Khan and Himansh) created a stir on X (Twitter) by posting documents to suggest that high-profile trainers, who are popular speakers at TEDx talks and college festivals were actually making losses on their derivatives trades. They were not the genius traders they claimed to be but earned significant income as trainers, which was supplemented by earnings as influencers, YouTubers and through referral fees from brokerage firms.
 
The fakery about their expertise is significant because people are lured into subscribing to the training or videos by the screenshots that they post every day, claiming to have made crores of rupees as trading profits. To curb this, Zerodha came out with a ‘verified’ label for the claimed profits. Most self-styled trading gurus and trainers claim to post ‘verified profit & loss (P&L)’ statements provided by top brokerage firms as proof of authenticity. But investor Zubare Khan (@KhanZubare) and others have posted videos that demonstrate how so-called experts edit their P&L and claim fake profits when speaking at traders’ meets.
 
 
Ashish Nanda of Kotak Securities, whose firm does not provide such authentication, has also posted a thread pointing out how ‘verified P&L statements’ from a single brokerage firm can mislead people since they do not provide a complete picture of a person’s trading performance across all accounts.
 
But the allegations against trainers were not limited to false claims about trading profits. Together, the vigilante group obtained documents that allegedly expose discrepancies and incomplete data, specifically with regard to two popular YouTubers – ‘Ghyansham Tech’ and Abhishek Kar.
 
Mr Bandi alleges that Abhishek Kar lures investors to subscribe to higher-tier training programmes with the promise of better profits, but they end up losing heavily. He also triggered an uproar by offering to donate Rs2 lakh to any charity of Mr Kar’s choosing by way of apology if he could provide verifiable proof that he had ever made a profit on futures & options (F&O) trading in the past two years. Significantly, while Mr Kar’s blog claims that ‘he is one of the most followed writers globally on financial markets on Quora…” and has 1.5mn (million) social media followers. Mr Kar has locked his Twitter account and deleted several tweets and videos that had made profit claims. Clearly, an influencer with a locked account is a serious contradiction. He has also not responded to the challenge except to say he is a ‘YouTuber first’, nor has he responded to an email from me
 
Dozens of investors have now come forward to say they suffered losses after being lured by the promise of trading riches. One investor says he had to sell land to pay for the losses. Many investors have emailed me about a plethora of dubious practices and fake gurus that brazenly flout SEBI regulations. One openly provides very specific options, tips, and strategies during market hours, with a vague trading document on how to follow the advice. Others pool money, and trade is an illegal portfolio management service.
 
The SEBI Act mandates the regulator to protect investors. While it is true that no regulator can protect people from their follies caused by greed, gullibility and desperate hurry to make quick money, the anger generated by the exposé indicates that SEBI surely needs to step up action against false claims and flouting of regulations. This is all the more important because many of the YouTubers routinely sneer at the regulator in their videos and claim it is sleeping on the job. Maybe it is a not-so-subtle message to their flock not to worry about being caught since SEBI is incapable of regulating the business, let alone punishing wrongdoers.
 
Investors have emailed dozens of names of trainers who, they allege, have been faking profit claims, providing tips (in the guise of trading strategies) through Telegram groups and shirking responsibility for losses. Most of these can be investigated only by SEBI, which is empowered to call for records and initiate action. Hopefully, the regulator will start looking at these seriously.
Comments
canraram
8 months ago
Investment is different from quick money. If lottery is whats everyone looking for, greed cannot be compensated or protected by any regulator.
Basic of stock trading is be prepared for loss as per your flavour. Your decision is the cause for it not others
kaustavmitra95.2
8 months ago
Unfortunately due to these youtubers like us suffer, who want to use this platform as a way of sharing our thought and almost doing everything for free on youtube what these YouTubers charge money for..

https://youtube.com/live/O23KP0SquMk .. this is the link to one of my video how I plotted chart levels and analysed the option chain before expriy..

These finfluencers charges heaps of money for the same.
smishra27
9 months ago
Sucheta Mam should get ready to create SCAM II book now. Although the scale looks smaller from surface, it affects far more people emotionally and financially. Hats off to your journalism.
shivendra139
9 months ago
Scammers Ghanshyam Tech must be in Jail to teach the lesson ...for decades
netpost987
9 months ago
Why shouldn't these fake scammers be in jail ?
vaibhavkumarsingh9901
9 months ago
Only way to earn money is to invest in good stocks...people should go for good quity advisor..
AnhonestInvestor
9 months ago
"Arrush Adityadev" founder of "Adlytick" is another fraudster who is active on Twitter and has innocent investors in his Telegram channel.
SEBI should take strict action against him.
iamsinha84
9 months ago
Trading referal income more than own trading
yerramr
9 months ago
Blasphemy. Training and Education, two most respectable professions became unethically commercial. Now they also do not have scruples, save very few exceptions. Sharing knowledge is sacred. Your story is painfully revealing.
Raja123
9 months ago
There are lots of people, who does this kind of activities, one of them is Vibhor Varshney. See his charges.
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manunse
9 months ago
Very good steps by SEBI ,but it's all too late ,98% already lost their money in markets by trading,which cannot be clawed back,
Only the high profile trainers made money some even left country,
I had 15 years of experience in trading ,I know what is market.
bhavanadipak
9 months ago
Well I too purchased a course which has not helped me a single day while trading . Nothing but discipline works here . Everything taught by Sameer Dharaskar in the name of Elliot waves and gann levels etc was no use while taking trades ! Self learning will only help . Have been in the market for now 1.6 yrs .. !!
jestondsouza12345
Replied to bhavanadipak comment 9 months ago
Dude any suggestions for beginner?
abhay1955
9 months ago
Quite true. I regularly watch VDOs on some of my favorite subjects. They include various advertisements. However, in last few months ads on share market training programmes have increased tremendously. They make big claims. It is not surprising that those who do not know even the basics of share market are falling for this, but even those who are in the market for years are falling for this to make quick money. I am not aware whether there is any act controlling such online classes or training programmes. In TV serials, the advertisements appear at fixed time. This is not so with these ads on Youtube. ASCI - Advertising Standards Council of India should take cognizance of this on its own without waiting for complaint from anyone. By the way, my share trading app displays SEBI warning at regular intervals about the 90% failure of F&O recommendations.
adityag
9 months ago
I beg to differ.

This is no different from the fitness industry, where you have physical trainers with no certification employed in gyms, and yet people seem to believe in that nonsense. Same for the nutrition and wellness industry.

Consumers should know better, and the "buyer beware" principle will apply, even with SEBI regulations. Because tomorrow, there will be something else to nitpick on.

Catch-22 situation. The joke is on us.
connectrishispoint
9 months ago
This should not be stopped, there are many more...
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