SEBI’s Crackdown on Finfluencers: How Investors Got Duped and How to Avoid Such Scams

In recent months, the Securities and Exchange Board of India (SEBI) has intensified its  crackdown on financial influencers (finfluencers) misleading retail investors. Two high profile cases—Ravindra Balu Bharti and Asmita Patel (“She-Wolf”)—highlight the risks  of following unverified investment advice on social media. This blog explores their  modus operandi, how investors fell for their schemes, and how you can invest safely.  

Case 1: Ravindra Balu Bharti – The YouTube Trap 

Ravindra Balu Bharti, along with his company `Ravindra Bharti Education Institute’,  used his large YouTube following to promote investment advisory services without  SEBI registration. His channels had over 10.8 lakh and 8.33 lakh subscribers, making  his influence significant.  

The company lured inexperienced investors by:  

– Offering trade recommendations under different investment plans.  

– Encouraging multiple subscriptions per client without full risk disclosure.  – Providing limited investor control over their own trades.  

How Investors Fell for It 

– Trust in Social Media Popularity: Many assumed high subscriber counts equated to  credibility.  

– Promises of High Returns: Investors believed in “proven” stock strategies.  – Lack of Financial Knowledge: Many did not verify if Bharti was SEBI-registered.   SEBI’s Action  

– ₹9.49 crore disgorgement order with 6% interest.  

– Ban from securities markets until April 2025.  

– ₹10 lakh penalty on associated entities 

Case 2: Asmita Patel (“She-Wolf”) – The Trading Guru Scam  

Asmita Patel, known as the “She-Wolf of the Stock Market”, built her reputation  through online trading courses. Her firm, Asmita Patel Global School of Trading Pvt  Ltd, ran programs like LMIT and MPAT, promising returns of up to 300%.

Her misleading claims included:  

– Managing a ₹140 crore portfolio, which SEBI found exaggerated.  

– A trading volume of ₹152.79 crore without corresponding profits.  

– Selling expensive courses under the guise of proven stock market strategies. 

How Investors fell for it 

– High Returns Promised: Unrealistic returns attracted greedy investors.  

– Professional Branding: Her courses and testimonials looked legitimate.  

– Fear of Missing Out (FOMO): Investors wanted to capitalise on her “secret”  strategies.  

 SEBI’s Action  

– ₹54 crore seized from her company.  

– Further investigation into ₹104.6 crore from course fees.  

– Ban on trading in Indian stock markets 

How to Avoid Falling for Finfluencer Scams 

  1. Check SEBI Registration  

 – Legitimate investment advisors must be SEBI-registered. Search their name on the  SEBI website ([SEBI Registered Advisors List](https://www.sebi.gov.in/)) before acting  on their advice.  

  1. Be Wary of Unrealistic Returns  

 – No strategy guarantees 300% returns or any return. Only fixed income  instruments like Fixed Deposits and Bonds give a certain return by way of interest  every year. Even this return is subject to credit risk (ie the issuer may default in the  payment of interest as well as principal). Investing involves risks, and anyone  promising quick profits is likely misleading you.  

  1. Avoid Unverified Social Media Advice  

 – Many finfluencers make money from views and sponsorships, not from actual  investing. Further, check and compare their returns with what the markets have given.  If PMS managers and mutual funds cannot give significantly higher returns than the 

benchmarks, then nobody can give high returns and any promise or assurance of  such high returns should not be considered.  

  1. Don’t Fall for FOMO  

 – Stock market success is about patience. If it sounds too good to be true, it  probably is.  

  1. Verify Investment Products  

 – If someone asks you to buy a course, subscription, or stock tips, ask yourself:  Why are they selling this if they can make money trading?  

 The Right Way to Invest  

  1. Choose SEBI-Registered distributors and producers 

 – Choose to invest in mutual funds, Portfolio Managers and Alternative Investment  Funds which are licenses and regulated by Sebi. Also, check whether the person  dealing with you is registered either as a mutual fund distributor with AMFI or as an  Investment Advisor with Sebi. Consider the education and experience of the person  advising you. Check whether they have the right investment qualifications such as  CFA, CFP, etc and have been in the business of investment advisory for a  considerable period of time.  

  1. Diversify Your Investments  

 – Never put all your money into a single stock or strategy. Use mutual funds, ETFs,  and index funds for balanced growth. Invest a portion of your wealth in fixed income  instruments such as fixed deposits, Public Provident Fund, Post office deposits,  bonds and debentures and debt mutual funds. Remember the thumb rule of equity  allocation – 100 minus your age. The rest should be in fixed income and gold.  

  1. Learn the Basics  

 – Instead of following social media advice, educate yourself through SEBI’s investor  awareness programs or reliable finance books.  

  1. Think Long-Term  

 – Stock markets reward patience, not speculation. Focus on consistent,  compounding growth instead of quick gains. Don’t indulge in trading. Own good  companies and ensure that you own shares of more than 20 companies. However, do  not over diversify. Owning more than thirty companies or many mutual funds will  become to cumbersome to manage. 

  1. Use Trusted Platforms  

 – Invest through registered brokers and financial platforms. 

Final Thoughts  

SEBI’s crackdown on finfluencers is a wake-up call for investors. While social media  can provide useful insights, relying on unregulated advisors can lead to massive  financial losses. Stay informed, invest wisely, and always verify the credibility of  financial advice before taking action.  

About EquiZen 

EquiZen is a registered mutual fund and PMS distributor, committed to offering  transparent and well-researched investment solutions. We ensure that all  recommended investments are credible, well-regulated, and aligned with your  financial goals. Visit www.equizen.in or contact us at +91 9820605203 via call or  WhatsApp. You can also email us at sanjay@equizen.in for expert financial guidance.  Secure your investments with knowledge and diligence.

From Luxury to Lies : The fall of Ritz Consultancy

Recently, thousands of investors across India fell victim to a massive financial fraud  orchestrated by Ritz Consultancy. The firm, led by Amber Dalal, a Mumbai-based  chartered accountant, promised lucrative monthly returns ranging from 2% to 8%,  luring people into investing their hard-earned money. Many individuals, enticed by  early payouts, increased their investments and encouraged their friends and family to  join, only to realise too late that it was a classic Ponzi scheme. This article explores  how the scam operated, the red flags that were ignored, how such schemes are  marketed, and key takeaways to prevent future financial losses 

How the Scheme Worked 

Ritz Consultancy positioned itself as a premier investment advisory firm, claiming to  generate high returns through specialised trading and investment strategies. They  gained credibility by setting up luxurious offices, hosting investment seminars and  providing early investors with seemingly legitimate returns. The company attracted  over 1,000 investors, including individuals from abroad, and collected over ₹380 crore.  As more people invested, the firm continued paying older investors using the money  from new entrants, a textbook Ponzi model. Eventually, as new investments dried up,  the payouts stopped, and the scheme collapsed, leaving thousands in financial  distress. 

Dalal was eventually arrested in Uttarakhand by the Economic Offences Wing (EOW)  after a complaint was filed by a fashion designer from Juhu. Over 600 investors came  forward, reporting major financial losses. Authorities have since frozen bank accounts  and seized digital evidence to trace the diverted funds. 

Why Investors Fell for It 

Despite initial skepticism, many investors were convinced by the following factors: 

  1. Guaranteed High Returns: Monthly returns of 2%–8% (translating to 24%–96%  annually) seemed too good to pass up. 
  2. Early Payouts: Initial investors received timely returns, reinforcing trust in the  scheme. 
  3. Professional Image: Ritz Consultancy operated from high-end offices, hosted  professional events and used polished marketing materials. 
  4. Referral Incentives: Investors were encouraged to bring in friends and family, further  expanding the scheme’s reach.

How Ponzi Scheme Operators Market Their Schemes 

Scammers use sophisticated techniques to lure victims, including: 

  1. Luxury Offices & Branding: A lavish setup gives the illusion of legitimacy and  financial strength. 
  2. Influencer Endorsements: Testimonials from well-known individuals create  credibility. 
  3. Exclusive Investment Opportunities: Investors are made to feel privileged to be part  of a ‘special’ opportunity. 
  4. Guaranteed Returns with Low Risk: The promise of high returns with minimal risk is  a major red flag. 
  5. Community & Networking Events: Personal engagement builds trust and a false  sense of security. 
  6. Multi-Level Marketing (MLM) Tactics: Referral commissions incentivize investors to  bring in more people, expanding the scam’s reach. 

Red Flags and Lessons Learned 

Investors overlooked critical warning signs, including: 

– Unrealistic Market Returns: One can expect the following returns from different  investments: 

 – Government bonds: 6.5%–6.8% per annum 

 – Fixed Deposits: 7%–8% per annum 

 – Stock Market: 12%–14% average annual return (with no guarantees) 

Any scheme promising over 15% annual returns should be approached with extreme  caution. 

Practical Guidelines for Safe Investing

To avoid falling victim to similar scams, follow these investment principles:

  1. Check Regulatory Approvals: Verify that the company and its intermediaries are  licensed by SEBI, RBI, IRDA, or PFRDA. 
  2. Demand Proper Documentation: Look for a prospectus or offer document detailing  business operations, risks, and financials. 
  3. Question High Returns: Be skeptical of any scheme offering more than 12%–15%  annually with ‘guaranteed’ profits. 
  4. Start Small and Verify: Begin with a small investment and check account  statements and terms carefully. 
  5. Diversify Investments: Avoid investing more than 10%–15% of your portfolio in any  single scheme. 
  6. Regularly Review Performance: Monitor investments critically and don’t let initial  gains cloud judgment. 
  7. Never Borrow to Invest: Avoid taking loans or mortgaging assets for speculative  investments. 

About EquiZen 

EquiZen is a registered mutual fund and PMS distributor, committed to offering  transparent and well-researched investment solutions. We ensure that all  recommended investments are credible, well-regulated, and aligned with your  financial goals. Visit www.equizen.in or contact us at +91 9820605203 via call or  WhatsApp. You can also email us at sanjay@equizen.in for expert financial guidance.  Secure your investments with knowledge and diligence.

All That Glitters is Not Gold

Recently, over one lakh investors in Mumbai learned this lesson the hard way when they fell victim to a Ponzi scheme orchestrated by a jewellery brand, Torres. Enticed by promises of monthly returns as high as 11%, many handed over their life savings, only to discover it was a fraud. This article delves into how the scheme operated, the red flags that were missed, how Ponzi schemes are marketed, and essential tips to protect yourself from such scams.

How the Scheme Worked

Torres set up 5–7 showrooms in Mumbai, offering seemingly irresistible returns ranging from 2% to 11% monthly. The company held seminars and conferences, showcasing their jewellery stores to convince potential investors of their legitimacy. Many cautious investors started with small amounts, which they increased once they saw returns credited regularly to their accounts. Encouraged by early success, some even marketed the scheme to friends and family. Tragically, several individuals mortgaged their homes, sold their jewellery, and committed their entire savings, including their retirement funds, to this fraudulent scheme.

Why Investors Fell for It

Despite taking steps like visiting stores and attending presentations, many investors overlooked fundamental red flags:

1. Unrealistic Returns: Promises of 2%–11% monthly returns translate to 24%–132% annually, far exceeding legitimate market rates.

2. Superficial Due Diligence: Investors were swayed by the company’s physical presence and promotional events without deeper financial scrutiny.

3. Peer Influence: The participation of friends, family, and acquaintances created a false sense of security.

How Ponzi Scheme Operators Market Their Schemes

Ponzi scheme operators deploy sophisticated marketing strategies to build trust and lure victims:

1. Luxury Branding: Operators often set up opulent offices, stores, or websites to project an image of success and legitimacy.

2. Social Proof: Testimonials from early investors and visible participation by well known individuals create a bandwagon effect.

3. Exclusive Offers: They target individuals with “special” or “limited” investment opportunities, making people feel privileged to join.

4. Guaranteed Returns: High, fixed returns with little to no risk are emphasized to attract risk-averse investors.

5. Community Events: Hosting seminars, conferences, and networking events builds trust and strengthens the illusion of authenticity.

6. Referral Incentives: Investors are incentivized to recruit friends and family, expanding the scheme’s reach and legitimacy.

Red Flags and Lessons Learned

While not much can be said about the effectiveness of the due diligence performed by these investors, basic investment principles were ignored. High and guaranteed returns should always be a cause for skepticism. Consider the following:

– Realistic Market Returns:

– Government bonds in India offer annual returns of 6.5%–6.8%.

– Non-banking financial companies (NBFCs) provide 9%–10.5% over 3–10 years. – Fixed deposits pay 7%–8% annually over similar periods.

– Stock markets average 12%–14% annual returns, with no guarantees.

The promise of 24% annual returns (or higher) should be an immediate red flag. Any scheme offering guaranteed high returns with little risk is almost certainly a scam

Practical Guidelines for Safe Investing

To protect yourself, follow these steps before investing:

1. Check Regulation: Ensure the company and intermediary are licensed and regulated by SEBI, IRDA, RBI, or PFRDA

2. Demand Documentation: Request a prospectus or offer document detailing the company’s operations, risks, and financials.

3. Question High Returns: Be skeptical of any scheme offering guaranteed returns higher than 12% annually.

4. Test Small Investments: Begin with a small amount and verify account statements and terms.

5. Diversify: Avoid committing more than 10%–15% of your investments to a single scheme.

6. Monitor Performance: Regularly review your investments and resist the temptation to invest more based on short-term returns.

7. Avoid Borrowing to Invest: Never mortgage assets or take loans for speculative investments.

About EquiZen

EquiZen is a registered mutual fund and PMS distributor. Our team is highly qualified in investments and finance, offering tailored solutions to meet your dreams. We prioritize safety and transparency, ensuring that we recommend only investments we trust ourselves. Visit [www.equizen.in](http://www.equizen.in) or contact us at +91 9820605203 via call or WhatsApp. You can also write to us at sanjay@equizen.in for a free consultation. Let’s secure your financial future together.

Beware of Financial Frauds: A Friend’s Story

In today’s fast-paced digital world, financial frauds are becoming alarmingly common. Many of us
have heard stories from family or friends who have fallen victim to these scams. Here’s one such
incident that serves as a wake-up call for all of us.

The “Erroneous Loan Disbursement” Scam

A close friend recently received a call from a person claiming to represent a well-known financial
institution. The caller explained that due to a processing error, a loan amount had been credited to the
friend’s account instead of his parent’s. To validate this, they sent a seemingly authentic SMS showing
the transfer details.

The caller created a sense of urgency, citing a child’s medical emergency, and pressured the friend to
return the money immediately. Feeling overwhelmed and trusting the “proof,” the friend transferred
several thousand rupees. Later, upon checking with his parents and reviewing his bank account, he
realized that no such transaction had occurred. It was all a scam.

How These Scams Work

1. Emergency Tactics:
Fraudsters fabricate crises, like medical emergencies, to make their victims act quickly.

2. Fake Evidence:
They use counterfeit SMS, emails, or screenshots to convince victims that their claims are
legitimate.

3. Constant Pressure:
They keep victims on the line or repeatedly call to prevent them from consulting others or
verifying facts.

How You Can Stay Safe

1. Pause and Analyze:
Don’t act on impulse, especially when someone claims urgency. Take time to evaluate the
situation.

2. Verify Independently:
◦ Check your bank account directly for any actual transactions.
◦ Do not trust SMS or screenshots as sole evidence.

3. Avoid Over-Engagement:
Hang up immediately and contact your bank through official channels to verify the claims.

4. Educate Others:
Share these experiences with family and friends to help them recognize similar tactics.

Fraud Prevention Tips

• Enable two-factor authentication on your financial accounts.
• Regularly monitor account transactions and set up real-time alerts.
• Never share personal or financial information over the phone or email.
• Report suspicious calls to your bank and the cybercrime helpline.