He Offered to Handle Her Trades for Just 35% of the Profit. That Offer Was Already a Violation.

Sunita runs a small business in Kolkata. An advisor called, offered to handle her trades, and asked for just 35% of the profit. No profit, no fee, he told her. That single sentence made his offer a profit sharing trading scam before a single trade was even placed.

This guide walks through why that arrangement breaks SEBI’s rules, what two real investors recovered in similar cases, and how the same violation shows up in “averaging down” calls from brokers and in paid courses run by finfluencers on Instagram and Telegram.

Is Profit Sharing With Your Broker or Advisor Actually Legal?

No. No SEBI-registered broker, sub-broker, research analyst, or investment adviser is allowed to take a share of your trading profits or losses, under any framing, at any percentage.

Sunita had a demat account with a well-known SEBI-registered broker and not much confidence in her own trading. So when a voice on the phone offered to do the hard part for her, it landed exactly where it was meant to.

He called himself an advisor. He would handle the trades. His terms sounded almost generous. Said only to take 35% of the profits. No profit, no fee. He only wins if you win.

It felt fair. It was already a violation before a single trade was placed.

He began running her account. The calls came on WhatsApp: this strike, this many lots, always spoken, never written down. He sent her screenshots of other clients’ profits to keep her confident. He nudged her toward “packages.”, took Rs 5,000 in cash, and more after that.

Soon the market turned. Her account suffered losses between Rs 1.2 lakh and Rs 1.5 lakh, while heavy brokerage piled up on every transaction. When she said she wanted to stop, the tone changed. When she asked for her money, the conversation turned into deposit more, take a package, we will recover it.

She blamed herself for letting him trade. That self-blame was misplaced. The arrangement itself broke the rules from the very first sentence, and three separate violations sit inside it.

1. Profit sharing itself is banned. “I’ll take 35% of the profit” is not a partnership. It is a prohibited arrangement, and it quietly flips the incentive. Someone earning a cut of your activity benefits from more trading, not better trading, which is exactly how accounts get churned.
2. Running your account for you is not allowed. A registered intermediary cannot operate your account or place trades without your specific authorisation for each one. The moment someone else is logging in and trading on your behalf, that is unauthorised account handling.
3. Personalised lot size calls go beyond any broker’s licence. A broker or research analyst can offer general views. Dictating exact strikes and quantities for your account, live on a call, is individualised advice they are not licensed to give.

This same boundary, execution versus advice, decides most disputes on this site. A broker’s registration authorises them to execute your buy and sell orders. It does not authorise them to tell you what to buy, how much, or when. That requires a separate SEBI registration as an Investment Adviser or Research Analyst, along with mandatory risk profiling before any recommendation. Keep this line in mind, because it comes up again below wearing a completely different disguise.

If the trades show heavy brokerage piling up on the contract notes, a broker or its sub-broker was likely driving the churn, and a SEBI-registered broker is accountable for the people operating under its name.

If it was sold as an advisory package instead, that is a research or advisory breach. Either way, the registered entity does not get to hide behind whichever individual actually called you.

Real Recovery Cases: Profit Sharing and Account Handling

Cases like Sunita’s are not isolated. Across India, investors have reported unauthorised trades, profit sharing arrangements, misleading return promises, and account handling carried out without proper consent, and several of these disputes have reached arbitration and regulatory authorities.

Case 1: How Mr. Ansari Reclaimed Rs 4.65 Lakh From NiftyPro

Mr. Muhammad Chand Ansari, a trader from Saharanpur, partnered with NiftyPro Trading Research after a representative assured him of guaranteed stock market profits.

He could not afford their Rs 1,00,000 monthly advisory fee, so the firm offered an illegal 30% account handling and profit sharing arrangement instead, and collected Rs 55,000 upfront.

Following their advice, Ansari invested Rs 4,65,000. The firm implemented no risk management, and his entire capital was wiped out. The firm then issued a fraudulent invoice, falsely labelling the profit sharing payment as a standard service fee.

Our team gathered voice recordings and regulatory precedents to represent him in online arbitration. The sole arbitrator ordered a 100% refund of his lost capital and upfront fees, with 15% interest.

Case 2: How an Investor Won Rs 15.57 Lakh From Aurostar

An investor hired Aurostar Investment Advisory for market guidance and paid their agreed annual fee of Rs 1,47,500. After taking the payment, the firm skipped the mandatory risk profiling step entirely.

Representatives then demanded an illegal profit-sharing cut, plus an additional Rs 5 lakh in cash, and explicitly instructed him to transfer it from his wife’s account to hide the transaction.

The firm then abandoned its own official SMS-only policy and pushed aggressive, high-risk recommendations through phone calls and WhatsApp instead, causing heavy losses.

The arbitrator held the firm fully accountable. The award ordered Aurostar to pay Rs 14,10,000 for the trading losses, plus a full refund of the Rs 1,47,000 fee, both carrying 15% annual interest until paid.

When “Just Average Down a Little” From Your Broker Is Actually Unlicensed Advice

Profit sharing is one way this violation shows up. There is a quieter version of the same problem, and it usually starts with a phone call rather than a written offer.

You were already down. The position was bleeding. Then the broker called. Confident voice, reassuring tone. “Aur lot lo. Average ho jayega. Ek bounce aaya toh sab recover ho jayega.”

So you bought more. The loss grew. They called again. You bought more again. By the time you stopped, your account was unrecognisable, and your broker was still collecting brokerage on every single trade.

You did not make a bad decision. You were pushed into one, and the logic behind it worked precisely because it sounded reasonable. Averaging down as a strategy is not illegal.

What crosses the line is a broker, who earns brokerage on every additional lot, telling you specifically what to buy and how much, without the Investment Adviser registration that kind of personalised call actually requires. That is the same execution versus advice boundary from Sunita’s case, just wearing a different script.

Every additional lot bought on that call generated fresh revenue for the person telling you to buy it. That conflict of interest sits underneath the friendly phone call, and it is worth checking your own experience against a short list of signs.

Genuine misconduct usually leaves more than one fingerprint, and any of the following, on their own or together, are worth documenting.

• They promised recovery as a certainty, such as “yeh stock zaroor bounce karega,” which no registered entity is permitted to guarantee.
• They gave specific, unsolicited trade instructions, exact quantity and price, without you asking for that advice.
• They never asked about your financial situation or risk appetite before pushing you to add more.
• The advice only ever came by voice call, with nothing in writing, which is itself a compliance gap since registered advisers must keep records of recommendations.
• You kept losing after every round of averaging, and the calls kept coming anyway.
• They turned defensive or dismissive the moment you questioned the losses.
• Your margin requirements were never explained before you were pushed to add to the position.

SEBI Action Against Finfluencers: When “Education” Becomes Illegal Advice

The same profit sharing and unlicensed advice pattern has a third disguise, and it runs entirely through social media rather than a phone call.

Finfluencers are digital content creators who cover stocks, derivatives, and trading strategy on YouTube, Instagram, and Telegram, presenting themselves as approachable educators. Many build trust through personal trading screenshots or a confident, relatable tone rather than any formal credential.

Their income usually comes from paid courses, mentorship programmes, affiliate or referral commissions, and subscription trading communities. Without registration, that income model creates the exact same conflict of interest as a profit sharing broker. What gets recommended can serve the creator’s earnings rather than the follower’s safety.

SEBI has repeatedly found the same violations behind this “education” label: unregistered investment advisory dressed up as content, specific stock tips passed off as teaching, real-time trading calls given live during paid sessions, undisclosed promotions, and outright promises of guaranteed or near-certain returns.

1. Baap of Charts

Mohammad Nasiruddin Ansari, known online as Baap of Charts, ran an unregistered advisory business through a large YouTube following and paid Telegram groups, giving live buy and sell calls with entry, target, and stop-loss levels.

SEBI ordered recovery proceedings of Rs 18.14 crore after he and his associates ignored earlier refund and penalty orders, ultimately freezing his bank accounts, demat holdings, mutual funds, and property.

2. Avadhut Sathe Trading Academy

This is SEBI’s largest finfluencer enforcement action to date. The firm collected over Rs 601 crore from more than 3.37 lakh participants through courses ranging from Rs 500 webinars to Rs 6.75 lakh mentorship programmes.

Investigators found live sessions giving real-time entry points, stop-losses, and price targets for specific stocks, continuing even after a formal SEBI warning in March 2024. SEBI’s interim order froze Rs 546.16 crore in identified illegal gains.

3. Asmita Patel

SEBI’s scrutiny of finfluencer Asmita Patel examined whether her paid trading programmes and promotional claims crossed into personalised advisory without proper registration and disclosure, resulting in a penalty of Rs 53.67 crore.

The case reinforced that an established public profile as an educator or trainer offers no exemption from registration and conduct requirements.

Under SEBI’s rules, an unregistered person or platform cannot do any of the following:

• Partner with a registered broker while offering unregistered advisory content.
• Run misleading promotions or hidden advertisements.
• Give real-time trading tips under the label of education.
• Offer investment advice without registering as an Investment Adviser or Research Analyst.
• Use market data less than three months old inside content framed as purely educational.
• Promise guaranteed or assured returns in any form.
• Withhold their registration number and official contact details.
• Run advertising or content that ignores SEBI’s code of conduct.

SEBI’s 2026 rules tightened this further:

• Mandatory registration for anyone offering investment advice, regardless of platform or follower count.
• Clear disclosure of sponsorships, affiliations, and paid partnerships.
• A ban on indirect commissions and referral-based incentives tied to trading volume.
• A prohibition on performance guarantees and selectively showcased results.
• Responsibility placed on social media platforms themselves to flag or restrict violative content.

What Ties All Three Together

A profit-sharing broker, a broker pushing you to average down, and a finfluencer running a paid Telegram group are, underneath the surface, the exact same violation wearing three different outfits. Someone without the right registration is earning more the more you trade, and telling you what to do about it.

Once you can name which of the three you are actually dealing with, the evidence you need becomes obvious. Pull together whichever of the following apply to your situation:

• WhatsApp messages or chat logs where trade instructions, a profit cut, or a recovery promise were given.
• Call recordings, if you have them, of averaging or profit-sharing conversations.
• Contract notes showing the brokerage pattern against your capital.
• Your account statement showing losses growing with each round of additions.
• Screenshots of “other client profit” images used to build your trust.
• Any record of a broker complaint you already raised that was dismissed or ignored.

Already have most of this together and ready to act? That is exactly where most people get stuck, not on whether they have a case, but on which portal to file it on first, how long each stage takes, and what to attach at each step.

Rather than repeat that whole process here, our full walkthrough of filing a complaint against a stock broker covers SCORES, SMART ODR, and exchange arbitration in one place, in order, with what to upload at each stage.

Before any of that, it helps to know exactly who you are dealing with. If you have not yet confirmed whether the entity is even SEBI registered, that is the first thing worth checking, since it changes which complaint route applies.

And if the firm has a documented history of run-ins with the regulator, our roundup of SEBI action against brokers is worth a look before you file, since a pattern of prior enforcement often strengthens a fresh complaint.

Be prepared for an early lowball settlement offer, a partial fee refund framed as generosity. That is the opening move, not the limit. Your claim covers both the fees and the trading losses, and the cleaner your evidence, the further it goes.

Has This Happened to You? Don’t Fight Alone.

If you have lost money to a profit-sharing offer, an averaging-down push, or a paid finfluencer course, the law is already on your side, but your evidence needs to be organised properly to use it.

Brokers, advisors, and finfluencers all count on investors giving up out of exhaustion. We don’t let that happen. When you register your case with us, we audit your chat history, payment records, and contract notes, draft your violation-wise complaint, and stand with you through SCORES, SMART ODR, and arbitration if it comes to that.

Register with us and let our team review your timeline before you take the next step.

Conclusion

Whether it arrived as a friendly 35% profit-sharing offer, a reassuring average down phone call, or a polished paid course on Instagram, the underlying violation is identical. Someone without the right registration profited from your trading and told you what to do next.

That is not a judgment call you got wrong. It is regulatory misconduct with a documented recovery path, and the two cases above show exactly what that path can return when the evidence is organised properly.

Save what you have. Confirm who you were actually dealing with. And take the next step in the right order.

Report. Recover. Stay Fraud Free.

Frequently Asked Questions

1. Can a broker or advisor legally take a share of my profits?

No. Profit sharing with a SEBI registered broker, sub-broker, research analyst, or adviser is prohibited outright. The offer itself is the violation, regardless of the percentage or how it is framed.

2. Someone else was placing trades in my account using my login. Is that allowed?

No. A registered intermediary cannot run your account or trade without your specific authorisation for each trade. That is unauthorised account handling, and it is claimable on its own.

3. I lost money, but I let him trade for me. Can I still claim?

Yes. The arrangement itself, profit sharing plus account handling, was prohibited from the start. That is the basis of the claim, regardless of the outcome of any individual trade.

4. My broker never put the averaging advice in writing, only phone calls. Does that weaken my case?

No. Verbal advice cases are filed and won regularly. Your account statement and contract notes showing repeated buying into a falling position, timed around the calls, carry real weight even without a recording.

5. Is averaging down itself illegal, or only the broker's role in it?

Averaging down as a trading choice is not illegal on its own. The violation is the broker's conduct around it, personalised buy instructions without an Investment Adviser registration, assured recovery promises, and brokerage earned on every additional lot.

6. How do I check if someone is actually SEBI registered before trusting their advice?

Search SEBI's official intermediary registry directly. A broker registration and an Investment Adviser or Research Analyst registration are separate categories, so confirm which one, if any, the person or firm actually holds before acting on their calls.

7. Is there a time limit to file a complaint on any of these?

For SEBI SCORES, file as soon as possible. For exchange arbitration, the window is generally three years from the date of the disputed transaction, so preserve your evidence now rather than waiting.