MC Exclusive| Less than a month after regulatory action, influencer RA tries to bend law again

Sebi has been aiming to increase the current 1,180 RA count to one million RAs. (Photo by KATRIN BOLOVTSOVA: Pexels)

A guest expert on a business news television channel, who recently faced regulatory action and was restrained from dealing in the securities market, has been trying to re-enter the market through illegal means, going by conversations that Moneycontrol has reviewed.

Mudit Goyal, who used to give stock recommendations under the tagline Mudit Ke Munafe, and was one of the noticees in an interim order passed by the Securities and Exchange Board of India (Sebi) on February 8, has reached out to a registered research analyst (RA) to “rent” the RA’s licence. Goyal is a registered RA but the recent Sebi notice restrained him from dealing in the securities market until further orders.

Also read: MC Exclusive: Unregistered PMS runs pyramid scheme to attract clients; offers BMW, Rs 1 cr house as incentives

"This (the Sebi notice) means that a noticee who is an RA cannot continue to give stock recommendations/trading calls using his registration," said Anand Kankani, a practising company secretary who counsels investment advisers and research analysts on securities law.

Sebi’s February 8 interim order to Goyal and others was in connection with a fraudulent scheme allegedly involving guest experts appearing on the Zee Business television channel. Prima facie, the evidence suggested that the guest experts were party to a fraudulent scheme. According to the interim order cum showcause notice, the guest experts informed their associates of the stock recommendations they would be making on the channel before their show aired. The associates, in turn, took a position in that scrip/contract and then reversed it after the recommendation was aired. Evidence allegedly showed that the profit thus made was shared with the guest experts.

Goyal, along with other noticees, was held jointly and severally liable for "wrongful gains" of more than Rs 7.41 crore.

What's the 'rental' arrangement?
Moneycontrol has access to the conversations Goyal had with an RA, in which he offers the latter Rs 15,000 a month to use the RA's licence on his Telegram channel. The messaging channel is open only to subscribers, for a fee, and it gives trading calls with entry, target and stop loss prices.

In the conversation, Goyal says that he needs the use of the licence for a few months and may need to extend it further. Asked about the Sebi action against him, Goyal confirms that he did indeed face regulatory action.

According to the RA, who wanted to remain anonymous, Goyal proposed to continue offering advice with the use of the RA's registration number.

Kankani said that such a "rental" arrangement, between a person who is barred from the securities market and a registered RA, goes against regulations.

When Moneycontrol reached out to him seeking a clarification, Goyal said that he had no comment to make on the matter.

Also read: Is Sebi trying a new tactic to crack down on unregistered advisories?

Not the first time
This isn't the first attempt influencers have made to rent RA licences. In fact, Moneycontrol had first written about this scam in June 2023, when some finfluencers said that they were choosing to rent out licences because their applications weren't going through for various reasons, including lack of credibility. They were even willing to offer the registered RAs up to 20 percent of the profits they earned.

Goyal meanwhile continues to hold his RA registration.

Market insiders, who spoke on condition of anonymity, said that the regulator should take more care while granting RA licences and cited instances where licences have been given to finfluencers who have flouted norms openly. For example, one finfluencer, whose attempt at "renting" an RA licence was exposed on social media, later cheerfully posted that she had received an RA licence. Another influencer, who was publicly called out for managing a client’s money without a registration and then losing a large part of the capital, has also been given an RA licence.

Sebi has been trying to get more people to register as RAs. The regulator has been aiming to increase the current count of 1,180 RAs to one million. But Chairperson Madhabi Puri Buch has also made it clear Sebi does not want the "wrong one million".