The advisory firm asks people to share their username and password of demat account so that it can trade on behalf of them and give a 20% assured return.  Is the market regulator keeping an eye on such entities?

The Securities Exchange Board of India (SEBI) which bars even mutual funds from assuring returns seems clueless about promises and claims of investment advisors such as VPS Advisors. A marketing email from an advisory company known as VPS Advisory, promises 20% returns.
 

The company claims it has a technique of making 20% profit consistently. The marketing mailer, full of grammatical mistakes, even mentioned that it never makes a loss. It said, “Overall at any worst case we make profit and come out.” For this, you will need to open a trading and demat account through them or give your demat account, along with the username and password! Also, in order for them to manage your account, you are required to keep a minimum capital of Rs50,000 in either your trading account or Rs50,000 worth of equity in your demat account. It is not too hard to figure out the ramifications of allowing someone else control your trading and demat account especially when they know your username and password.

 

VPS Advisory also gives the answer about how it can manage to provide 20% assured return. It says, “because of group of people trading with us with huge money flow keeps us in profitable situation.” This claim even may make market gurus, like Warren Buffet, blush. ‘People with huge money’, however, is no guarantee that they would share their profit with someone like you.
 

The advisory targets savers who do not have money but want to make more money. Their email states: “This service is basically for those who have less capital to invest but want to make more money. Or for small investors who are looking for consistent return.”

“20% return service is perfect for small investors, fixed salaried people (who have limited salary and unlimited expenses) and EMIs, loans, for government employees, etc,” VPS Advisory mail adds.
 

It is pertinent to note that the company claims to be ‘pioneered’ by the graduates of the Indian Institutes of Management (IIM) and Indian Institutes of Technology (IIT).
 

The company has even posted screenshot of several costumers’ trading and demat account. The notion of leaving others to control your personal trading account is simply appalling. Here, you can see it by accessing this link: http://www.vpsadvisory.com/p/20return_9178.html.
 

This is not the first time we wrote about such firms big on ‘guarantees’ with promises of lavish and ‘assured’ returns. We had first exposed about the Stockguru scam, which promised investors 120% returns, way back in 2010 (), but regulators did nothing then. Fast forward to present and what has the regulator learnt? Instead, the Stock Guru duped investors to the extent of Rs1,500 crore! Back then, Stockguru was offering Rs22,000 on an investment of Rs10,000 in one year, and called itself investment advisors. Unfortunately, the lack of financial literacy and regulation meant investors fell for it. And lost money. The entire saga as exposed by Moneylife can be read here:
 

Very often there would be similar operators who would solicit stock market tips on mobile phones and claim more than 90% accuracy. For instance, a website CallOptionPutOption provides such trading tips ranging from stock options to Nifty Futures tips and Nifty Options tips. It claims over 200% profit per month. For this ‘plan’, capital of Rs10,000 is required and tips are provided with one target price and one stop-loss. Subscription to this scheme ranges from Rs3,000 to Rs30,000, depending on the plan you choose. There are many more that we had covered way back in 2011, and our piece can be accessed here:
 

Three years later, the scene hasn’t changed much. Is SEBI listening?
 

We had reported several similar companies and they can be accessed below:
 

Now MLM selling assured returns for kits on share trading! -- A write up on BSB Trading,
which promised dubious double your money in a matter of months.
 

From exchanges to MLM swindlers: Why are all of them so enamoured by forex trading?
 

Hyderabad-based Variety Consultancy promised 15% return on investment per month
for buying its forex and commodities training packages