Sebi cracks down on YouTuber for illegal investment advisory services

Sebi's investigation revealed that YouTuber Ravindra Balu Bharti and his company targeted novice investors by providing unregistered investment advice, trade recommendations, and execution services

India’s market regulator, Securities and Exchange Board of India (Sebi) has taken action against YouTuber Ravindra Balu Bharti and his company, Ravindra Bharti Education Institute, for operating an unregistered investment advisory business. Sebi has barred them from participating in the securities market until April 4, 2025, and ordered them to return Rs 9.5 crore, the amount earned through their unlawful activities, according to The Times of India report.

 

Sebi’s investigation revealed that Bharti and his company targeted novice investors by providing unregistered investment advice, trade recommendations, and execution services. With a substantial following of 1.9 million subscribers across two YouTube channels, Bharti used his platform to influence his audience into making high-risk investments. 

 

The company promised ‘high returns’ but failed to disclose the accompanying risks while operating without the mandatory Sebi registration. They also used manipulative tactics, such as offering multiple investment plans to the same individuals, thereby curbing their ability to make independent financial decisions.

 

Sebi’s order highlighted that Bharti’s company breached securities regulations and neglected its fiduciary obligation to act in the best interests of its clients.

 

What are the penalties on Youtube ‘finfluencer’? 

Apart from the repayment directive, Sebi has imposed a ban on Bharti, his company, and their associates from participating in any securities market activities until April 2025. They are also prohibited from offering investment advisory services without obtaining proper Sebi registration. Additionally, Sebi levied a Rs 10 lakh penalty on Bharti and his associates for their misconduct.

 

This decisive action by Sebi serves as a warning to individuals and entities operating in the securities market without proper authorisation and engaging in fraudulent practices.

 

What are Sebi’s rules for financial influencers? 

Earlier this year, Sebi introduced stricter regulations targeting financial influencers, also known as ‘finfluencers’, to safeguard investors. Sebi has banned brokers, mutual funds, and other regulated entities from associating with unregistered financial influencers for marketing or promotional purposes. This includes financial transactions or client referrals involving these influencers.

 

Meanwhile, finfluencers engaged exclusively in investor education are exempt from these restrictions, provided they refrain from giving specific investment recommendations or guaranteeing returns.

 

Additionally, finfluencers offering advice or recommendations on securities must register with Sebi. This requirement aims to ensure accountability and maintain a standard of expertise in the industry. Registered financial influencers must include their Sebi registration number, contact details, and appropriate disclaimers in their content. They are also required to adhere to a code of conduct defined by Sebi and other regulatory authorities.

 

Unregistered influencers are prohibited from making explicit claims about returns or performance. This measure is intended to protect investors from misleading information.

 

Sebi has also taken proactive steps to enforce its new norms, including the removal of content from over 15,000 unregulated entities. This effort is part of a broader initiative to tighten regulations around financial advice on social media platforms.