On Tuesday, the Securities and Exchange Board of India (SEBI) took action against YouTuber Ravindra Balu Bharti and his company, Ravindra Bharti Education Institute, for running an unregistered investment advisory business. SEBI has banned them from participating in the securities market until April 4, 2025, for allegedly misleading inexperienced investors. The regulator also ordered Bharti and his company to return the Rs 9.5 crore they earned from these illegal activities.
In its final order, SEBI stated that Bharti’s company had provided unregistered investment advice, trade recommendations, and execution services, which attracted inexperienced investors into the securities market through their premises and staff.
What Happened?
The Scam:
Ravindra Bharti, who has two popular YouTube channels with a combined 1.9 million subscribers, used his online influence to lure followers into high-risk investments. His company, Ravindra Bharti Education Institute, advertised “high returns” to investors, promising significant profits from the stock market. However, the company was not registered with SEBI, which is mandatory to legally offer investment advice or trading recommendations.
Bharti and his team didn’t just provide general advice; they sold multiple investment plans to individual clients, limiting their ability to make independent decisions. They failed to adequately disclose the risks associated with these investments, leaving many inexperienced investors vulnerable to significant financial losses.
SEBI’s investigation uncovered that Bharti’s company used deceptive methods to sell fraudulent “expert advice” to young, naive investors seeking quick profits. The company violated securities laws and neglected their fiduciary duties, which require financial advisors to prioritize their clients’ best interests.
SEBI has ordered Bharti and his company to return the Rs 9.5 crore they earned from this illegal activity, in addition to penalties and interest charges.
Penalties and Restrictions:
Apart from the financial penalties, SEBI has imposed a ban on Bharti, his company, and several associates, prohibiting them from engaging in any stock market-related activities until April 2025. They are also barred from offering investment advisory services unless properly registered with SEBI.
Additionally, SEBI has imposed a penalty of Rs 10 lakh on Bharti and his associates, reinforcing the seriousness of their violations.
Why This Matters to You
For young investors, this case serves as a crucial reminder to be cautious when seeking financial advice online, particularly from influencers who promise quick, high returns.
Here are some key takeaways:
- Check Credentials: Always ensure that anyone offering investment advice is registered with SEBI. If they’re not, consider it a red flag.
- Understand the Risks: All investments carry risks, especially in the stock market. Never invest based on promises of high returns without a clear explanation of the risks involved.
- Avoid Following the Crowd: A large following on YouTube or social media doesn’t necessarily equate to trustworthy advice. Seek guidance from certified professionals with proven expertise.
- Stay Educated: Continuously educate yourself on personal finance and investment strategies. There are many reliable resources available to help you make informed, safe financial decisions.