Investment advisors are there to provide guidance to emerging traders & investors but some IAs tend to misuse their license to meet their own evil interest.
This is the case where a Registered Investment Advisor (RIA) did a scam of ₹90,000 with one of his clients Kabir (name changed).
This all started on May 29th, 2024, when Kabir received a call. It was from SEBI registered investment advisor Aniket (name changed). He asked him about Kabir’s investment interest on call.
Kabir wants to invest but by learning does not need any advisory services. However, Aniket insisted that he take his demo calls atleast once. On this Kabir agreed.
Now, here for the information, Registered Investment Advisors are not allowed to give Demo. However, Kabir was not aware of the same.
The investment advice worked positively and so he agreed to take his services. However, Aniket didn’t charge any fees and offered him profit sharing.
An aware person might have stopped there only as profit sharing is something that is not only unethical but illegal as well. And as far as RIAs are concerned, doing so is a complete violation of SEBI rules & guidelines.
In short he gave two hints and big red-flags but lack of awareness leads to the loss of ₹90,000.
Later when Kabir contacted him, he apologised by saying that this happened due to a mistake of one of his employees. Further to compensate the same Kabir can take advantage of their services for FREE for a year.
Now, this is their other way to protect themselves from regulatory penalties and to benefit themselves by keeping their clients’ interest at stake.
It is good not to fall in such traps and take the right action against RIA by filing a complaint in SCORES.
Now, how to protect yourself from falling into the trap of such unethical practices of RIAs?
- Before taking any advisory services, make sure you conduct a complete research & validate every detail.
- Keep yourself aware of the market regulations.
- Avoid taking services from advisors claiming guaranteed returns
