From ‘machli’ to ‘murgi’ and 'chai': Finfluencers work out cryptic phrases to escape Sebi glare

Fake stock market gurus or furus seem adept at finding a way around every regulatory hurdle placed on their path.

Finfluencers are finding innovative ways to get around the market regulator’s increased scrutiny of unregistered investment advice.

Besides renting a registration number, which Moneycontrol had reported earlier, the finfluencers are running YouTube channels where the ‘buy’ and ‘sell’ calls are disguised in code, setting up companies as a partner of a registered analyst (RA) and more.

A YouTube channel that has a few lakh followers uses a language that its followers understand.

Also read: SEBI is right in asking for higher ownership disclosure by FPIs, but what took it so long?

For example, there is a channel that uses phrases with chai (tea) and phal (fruit). When they say, “hum chai pee rahe hain” (we are drinking tea), they believe that the index is about to fall. That is a sign that their followers should buy a put. To indicate the strike price, they keep their trading charts open and keep the cursor at the level they believe the index will move.

On the other hand, when they say, “hum phal kha rahe hain” (we are having fruit), they are signalling that the index will go up. Therefore, their followers will know that they should buy a call.

There is another channel that says something like “machli mar gayi” (the fish died), then the followers understand that the price is about to fall. On the other hand, when they say, “murgi kha rahein hain” (we are having chicken), then they are expecting the price to go up.

A person who has been following these social-media channels closely told us that the content creators seem to have coached their followers on these phrases a few months ago.

“They have a few lakh followers but they get around 25,000-30,000 views. That is a big conversion rate, when you consider that channels with much bigger subscriptions see many a few thousand views per video on a regular day,” said this person, who did not want to be named.

“I have seen people pay them even Rs 10,000 on Superchat, for helping them make a few lakh in profit,” he added. Superchat is a feature on YouTube that allows people to pay the content creator while on live chat.

Partnership model

Another way people are planning to escape the regulatory clasp is by setting up companies by partnering with an RA.

If any investment advice is given, it has to be given in the name of a registered analyst. Therefore, with this partnership set up, the finfluencers are thinking of giving advice under the company’s name but messaging it differently in their social media channels.

“The finfluencer will tell his or her followers that they have formed a partnership with this particular RA. Then, he or she will tell his or her following that ‘to get more tips from our team subscribe to this Telegram channel’”, explained a finfluencer, who did not want to be named. When the finfluencer uses the word ‘our team’, his or her followers will understand that the tips or trading calls are coming from the finfluencer and not really the company.

Another influencer had tried a different tactic, by signing up as a marketing manager of an RA. While that looks innocuous--that is, using the reach of one to advertise the services of another--sceptics said that the arrangement would work differently in reality. That is, the advertisement will pull the finfluencers’ followers to the RA’s channel, but the followers will believe that the finfluencer--and not the RA--is giving the advice.

But faced with backlash, the finfluencer seems to have dissolved that ‘marketing partnership’.

This finfluencer had faced a lot of trouble recently for holding a live trading session in which he is said to have shown an obviously Photoshopped screenshot of his profits. The levels of an index, at which he claimed to have made profits, did not exist.