Baba Ramdev, yoga guru and founder of FMCG company Patanjali Ayurved, has landed in trouble with the Securities and Exchange Board of India (SEBI) for a sermon during a yoga session, in which he asked his followers to invest in Ruchi Soya.
The market regulator has written to Ruchi Soya and the bankers involved with its follow-on public offer (FPO), asking for an explanation. The development was confirmed by a close aide of Ramdev.
According to sources, SEBI has sought an explanation from Ruchi Soya and merchant bankers for flouting investment adviser regulations and norms on insider trading and unfair trade practices.
“Merchant bankers have received a communication from SEBI for clarifications in relation to compliance of public communication guidelines, which has been duly responded to,” said the source.
Patanjali Ayurved acquired bankrupt Ruchi Soya, known for its Nutrela brand of products, under the Insolvency and Bankruptcy Code in 2019. Baba Ramdev is a non-executive director of Ruchi Soya. Ruchi Soya soon plans to raise Rs 4,300 crore through an FPO after receiving regulatory approval from SEBI in August.
SEBI pulled up Ruchi Soya and Baba Ramdev after the video, in which Ramdev is asked his followers to invest in Ruchi Soya to amass wealth.
“I will give you a mantra to become a ‘crorepati’. Today itself, you should open a demat account, which is mandatory to trade in stock markets. I have also learned this recently,” he can be heard saying in the video in Hindi while performing yoga.
“I give you guarantee that nobody can stop a person from turning ‘crorepati’ if he invests in Ruchi Soya or Patanjali,” he says addressing his followers during the session.
“Do not buy and sell the stock but let it sit for a while. Buy the share and take a ‘samadhi’,” he adds.
The yoga guru also says during the address that Patanjali’s market cap will be in crores if it is analysed by any agency in the world.
A close aide of the guru defends him saying that holding a demat account is a necessity these days and is as much needed as an Aadhaar card or PAN card today, and, hence the statement is not against the norms.
Legal experts, however, have a different view.
In legal soup
Ramdev’s preaching, which most likely aims to ensure that the company raises enough funds from its FPO, has not gone down well with the market regulator.
“As per SEBI norms, only certified investment advisors can give investment advice related to markets about which stocks to buy and sell and the guru can be seen advising his followers against the regulation,” said Sonam Chandwani, Managing Partner at KS Legal & Associates.
According to R.S. Loona, Managing Partner, Alliance Law, the guru is also promising his followers returns in crores if they invest in the Ruchi Soya stock, which is not in the spirit of the market. “Any advisor has to put a true picture about an investment in front of his or her client and also make them aware of the risks involved. Hence, his statement is misleading,” he adds.
They, however, indicate that Ruchi Soya and Baba Ramdev may not face a penalty and the market regulator would let them go unpunished this time, given that this is the yoga guru’s first transgression and he can claim ignorance about market-related norms.