Registration of a research analyst (RA), who has lakhs of followers across various social media channels for his stock recommendations, has been suspended for three months.
Harinder Kumar Sahu is an RA and a finfluencer with more than 96,000 followers on Twitter and runs a YouTube channel named King Research Academy that has more than 6.13 lakh subscribers.
What is interesting is that, when the market regulator asked why he didn't hold the requisite certification for a period of time, Sahu--who shared a "500% profitable strategy" with his followers--said that he had to make multiple attempts over seven months to clear the exam.
On March 21, the Securities and Exchange Board of India (Sebi) suspended the certification of registration of Sahu (INH200005753).
The regulator has found him in violation for not publishing the investor charter and investor complaints on his website, for not holding the necessary certification for a period of time, for making unverifiable claims of 80-90 percent accuracy with various products offered, for trading in securities that he recommended through his Telegram channel within a time frame that isn't allowed by law, for not disclosing material information including his financial interest in the securities he was recommending, for earning from referral income without disclosing it and making misleading claims such as "No loss options strategy! 500% profitable strategy", and not maintaining a record for recommendations he was making on Telegram channels.
Oops! Two misses, not one
While he was trying to explain why he hasn't done his compliance audit for FY21, he stated that the compliance audit for FY22 was also being completed. This submission revealed to the regulator that the compliance audit was not done for two fiscals--FY21 and FY22.
Sahu submitted that he didn't do the compliance audit for FY21 because he wasn't active during that period. He said that he resumed his activities only after September 1, 2021.
To this, the regulator's order stated, "that the RA Regulations does not relax the requirement of conducting annual compliance audit in the event of being inactive."
In his response, which were submitted in February 2024, Sahu also said that he was getting the compliance audit for FY22 done. This showed that even in FY24 his audit for FY22 was not completed.
The Sebi order stated that Sahu "has admittedly submitted (through his responses to the regulator's queries) that the compliance audit of 2021-22 has yet not completed".
Harinder Kumar Sahu's response
Sahu reached out to Moneycontrol to put forth his point of view.
On the allegation that he promised clients a profit of 500%, he said, "I would like to bring to your notice that we have nowhere commited or given assurance that our clients will earn 500% or 100% profit by subscribing to our services instead we have stated in our youtube videos by showing our strategies that if you properly follow these strategies you may earn the mentioned returns in some stocks. That video was free for all followers and it was for education purpose only. We never use promised word."
However, the Sebi order noted that the taglines such as “No Loss options strategy! 500% profitable strategy” are used to make investors believe in assured percentage of returns from the recommendation.
Sahu also added, "SEBI has nowhere mentioned that I have committed a scam or fraud with clients or any illegal activity."
However, the Sebi order stated that the tagline used by Sahu for the videos "are misleading in nature and are used to lure gullible investors".
The order added, "Therefore, as observed by the DA (Designated Authority) in the ER (Enquiry Report), I note that he has induced investors by influencing their decision w.r.t. dealing in securities."
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
