Furu-buster busted, caught discussing his illegal PMS service

It is hard to prove that a person is illegally managing another's money, if it is being done by taking the other's trading account's log-in credentials.

Over the last few months, a group of vigilantes has been busting fake stock-market gurus (furus) on X and winning followers. But they now find themselves on the wrong side of the story.

The furu-buster/vigilantes—there are three or four of them—have been exposing trader-trainers who falsify their trading profit-and-loss (P&L) statements to sell courses and stock tips, and have made their fair share of enemies and admirers. However, one of the busters has now been caught on the wrong foot.

Also read: Fake It Till You Make It: Shady Zerodha lookalikes peddle bogus P&L statements

In a Twitter Space recording, Arush Sarna, the furu buster, who is better known as Crosshair, was caught discussing his portfolio management service (PMS)—a service that would be illegal sans a licence from regulator Sebi. Talking to Moneycontrol later, he denied running such a service and said that all the claims in the recording were made in the heat of the argument. However, the recording of his conversation strongly indicates otherwise.

In the Space, a participant accused Sarna of causing losses to someone by managing their money poorly. Rather than saying he does not manage anyone’s money as he isn’t licensed to do so, Sarna said that he never promises high returns to anyone.

In a recording of that Space, which Moneycontrol has accessed, Sarna can be heard saying, “Log mere paas aathe hain ki bhai please please mera account le lo, aur mein screening karta hun… ki samne wale ki aukat kya hain… us aukat kein hisaab se woh capital de raha hain toh mereko feasible lagta hain.”

A rough translation would be that people approach him, and ask him to manage their trading account. He then looks at their financial status and decides whether to take them up. If the potential client is putting up capital based on a strong financial status, then it will be feasible for him to go ahead.

In another part of the conversation, Sarna can be heard challenging a participant to get a client to say that he has promised him assured returns without disclosing the risks involved.

Unlicensed money managers

If furus are a menace that preys on retail traders, another and even more dangerous threat is illegal PMS services. Zubare Khan, one of the furu-busters in the vigilante group, had made a video on such PMSs, calling them a “bigger scam” than fake stock market gurus.

There are mainly two ways in which illegal PMSs are run. A client can either transfer money to the account of the ‘fund manager’ or the client can provide the login credentials of his/her trading account to the manager. In both cases, the ‘fund manager’ does not have any kind of licence to manage a third party’s money, but gets clients based on his market reputation.

In the Twitter Space mentioned above, a participant asked Sarna to provide proof of his trading proficiency, just as his group was demanding evidence from furus trying to sell their courses. The proof usually demanded is the verified profit-and-loss (P&L) statement (marked to market) of their trading account. Verified here refers to a trader’s P&L statement being authenticated against the brokerage’s backend data.

The participant demanded that Sarna provide his verified P&L and claimed that his friend suffered losses in a PMS managed by Sarna. The furu-buster defended himself by saying that he takes on clients only after checking their financial situation, as quoted above.

Khan, who was part of the Space, seems to have been aware that Sarna was managing money without a licence.

In the Space, when he was accused of protecting his friend Sarna by not demanding the same accountability from him in the form of a verified P&L, Khan said that he has made a video on people running illegal PMSs, too. “It’s not that if my friend is doing something (illegal) I look away. I made a video on that (illegal PMSs too),” he can be heard saying.

Khan later told Moneycontrol that if there is evidence that Sarna was running an illegal PMS and that he had caused losses to someone, then he would definitely call out his friend and ask him to compensate the victims with a refund. As of now, he said that he hasn’t seen any proof that Sarna has managed money for someone else and caused losses to them.

“If someone is transferring money to another person’s account to be managed, then it is illegal. But if a person is giving his trading credentials to another person, asking the other person to trade on his behalf, then what proof can be there for that,” he asked.

As Khan pointed out, the second arrangement is hard to prove since the login details are of the client.

Also read: How furus manipulate `verified’ P&L statements to show profits on their trades

The defence

Sarna told Moneycontrol that he only manages the trading accounts of his friends and family, because many of them are outside India and find it hard to track trades here because of the time difference. Sarna said he does not take money for this.

In the Twitter Space, he can be heard talking about the “cut” he makes, when the conversation is around PMSs. Sarna told Moneycontrol that he was referring to the money he makes from coding strategies that people design, and insisted that he does not design strategies himself.