SEBI, the regulator of the market, comes up with rules, plans and services to provide better services to retail traders & investors and at the same time safeguarding their interest.
To make it easier for beginner traders, it provides certification & license of Research Analyst & Investment Advisors who can provide trading tips & investment advice to their clients respectively.
Now they can do this by following proper guidelines like providing every tip and recommendation with a proper reason. Other than this they cannot be mis-influenced or give guaranteed returns to their clients.
Most of the traders are not aware of these regulations. IA & RA take advantage of this and provide services for their own interest & benefits.
Aviraj (name changed) who was a college student lost capital of ₹1,50,000 after he took the services of SEBI registered Research Analyst.
Here is how it all started.
Aviraj was doing a B.Com and was in 2nd year. One day his friend suggested he open a demat account and to invest in equity. He liked the idea and opened an account.
Although, due to shortage of funds, he didn’t make any big investment. But soon after opening the account he started getting calls from random numbers.
One day he received a call from a person, Kunal (name changed). Kunal claimed himself as a SEBI registered Research Analyst. To validate it, he also shared his website with a complete detail of registration number.
Aviraj was not interested though, but Kunal convinced him to take a demo. In the demo he made him buy options. Aviraj had no idea of options trading but out of 4 calls of Kunal he earned profit in 3 calls.
That day he earned a profit of ₹9,000.
Kunal then pressured him to take his services. Aviraj told him that he had no money, but he convinced him by saying that he would help him in getting sure-shot profit.
On this Aviraj paid him ₹25,000 as a fee from his college fees amount. That day again Aviraj made good profit.
But the next day Aviraj was not available as he had his exam. When he denied taking call tips that day, Kunal told him that market conditions are favorable and he can earn a good profit today.
Somehow, Kunal convinced him to share his account details. Not aware of the risks and market regulations, Aviraj shared his details. That day he had ₹1,50,000 in his account.
When he returned, he found that Kunal had taken multiple positions in options and blew off his account.
When he raised this, he asked him to add more amount and gave him assurance of loss-recovery. However, Aviraj couldn’t as he had no funds left.
So, what does Aviraj miss?
- He didn’t check the regulations of SEBI related to RA & IA.
- He became greedy and shared his account for handling.
- He traded in options, of which he had no knowledge.
What’s the Solution of this?
In such cases, victims like Aviraj can file a complaint against RIA (registered investment advisors) in SEBI SCORES portal.
You can easily register to SEBI SCORES portal by following simple registration & filing process. Before filing a complaint make sure you gather all the necessary details and proofs required to validate your points.
