'Partner’ of leading brokerages accused of editing P&L for online traffic; brokerages largely noncommittal

The finfluencer's critics said that even if it was a mistake caused by a tech glitch, Kirola could put an end to the whole argument by sharing a verified P&L statement. (Photo by Geri Tech:Pexels)

Several users of X, formerly Twitter, have accused a referral partner of leading brokerages of manipulating his trading profit and loss (P&L) statements to bag more students for his courses and to funnel more people to partner brokerages.

The referral partner Dinesh Kirola's influence has been growing fast, with more than 5 lakh Instagram followers and nearly 4 lakh YouTube followers, besides the subscribers for his Telegram channel and WhatApp group.

The higher the profit shown—in this case, Kirola showed 150 percent return on investment or ROI—the more likely people are to enroll as students and the more likely they are to try trading strategies offered through the brokerage accounts suggested. The oft-used trading strategy of scalping, which involves buying and selling frequently, would be particularly beneficial to brokerages which profit exponentially as trade volumes go up.

The referral links Kirola’s website hosts are to open accounts in various brokerages, including Angel One, Zerodha, Upstox, Fyers and Dhan; and he has said in his Telegram channel that whenever people open accounts though these links, he earns 10-20 percent of the brokerage fee.

Moneycontrol brought up the accusation to the brokerages concerned and only one—Zerodha—committed to blocking Kirola from being a referral partner, though after two weeks. A compliance officer said that brokerages are expected to end partnerships if they have even a hint of a fraud being committed by the partner.

Zerodha’s spokesperson said that they cannot comment on individual clients (such as Kirola) but said that they block referrals from people who are reported to be committing fraud and that this process usually takes two weeks. Moneycontrol will update the article after two weeks after checking if Kirola’s referral link is still active.

Tejas Khoday, co-founder and CEO of Fyers, said that they cannot comment on the video (shared on Twitter as capturing the P&L manipulation) or take action based on it because “it cannot be taken as true on face value”.

Khoday said that Kirola was indeed a referral partner but that the brokerage does not take “any responsibility of what they (referral partners) claim about their performance”.

The spokesperson for one of the brokerages in question, who did not want to be named nor the firm identified, said they cannot terminate a partner contract without reason. But the brokerage’s code of conduct for partners said just that, that the brokerage reserves the right to terminate the partnership without giving any reason.

A circular on Revised Code of Advertisement for Stock Brokers released by the National Stock Exchange on February 2, 2023, said that advertisement/material should not contain any false/misleading/biased/exaggerated/deceptive/ambiguous statement and that stock brokers “should have an internal policy/framework to ensure compliance by itself and Authorized Persons/Business Partner/Channel Partner of the members or Influencer/Blogger being paid by members, with the circulars/guidelines issued by the Exchange/SEBI [Securities and Exchange Board of India] for Advertisements”. Though the circular defines advertisement as “all forms of communication issued by or on behalf of or in relation to Stockbroker in publicly available media that may influence investment/trading decisions of any investor/prospective investors”, some brokerages believe that the circular does not cover referral links.

Kirola, who goes by the name of Stock Burner on many social media platforms and who earned fame as the army person who turned his life around through trading, allegedly edited his P&L statement of August 3 to show that he made a profit of around Rs 5.6 lakh, when it should really have been lower at Rs 4.3 lakh.

Reuploading this Video on Youtube for those who came from Instagram and Youtube and trust Furus those who refresh pages to show authenticityhttps://t.co/7oJLorDnlphttps://t.co/UJciNFpXmopic.twitter.com/bJE27LKovg

— Johan Liebert (@itsJohanLiebert) August 19, 2023

After social media handles called him out and a few finfluencers or financial influencers who had interviewed him took down their videos, he released an apology video, in which he said that he did make a mistake.

“I do scalping from my phone and I had placed exit orders on it but my (computer) screen showed the trades as running (which reflected on the P&L statement)… I thought that the P&L statement had been reflected by trades correctly,” he said.

The rest of his explanation seems to suggest that he had generated the PDF from the ‘faulty’ terminal that reflected the wrong P&L statement and used it as a ‘live’ trading result in a vlog titled “How I made profit of +5 lakh Nifty Expiry-150% RoI”. He said that he had noticed that the statements didn’t match but didn’t correct it thinking that no one would notice, but then someone did, and he was forced to give a clarification.

“Yes, I did make a mistake but to hide the mistake, I made a bigger one,” he said. Moneycontrol tried to reach him through email and phone messages, but he hasn't responded to any of them.

His critics said that even if it was a mistake caused by a tech glitch, Kirola could put an end to the whole argument by sharing a verified P&L statement. There are various platforms, either broking platforms or those associated with brokerages, which offer to verify a trader/investor’s statement.

Kirola has not responded to such requests but has offered to share verified P&L statements henceforth. “If he can share verified statements of other dates, why can’t he do that for the contested date,” asked a Twitter user.

FYERS’ Khoday said, “We regularly caution people to only rely on verified P&L links and not screenshots or videos as they can be faked.”

CS Kruti Gogri, a SEBI compliance expert with over 14 years’ experience and founder of Kruti Gogri and Co, said that if brokerages are made aware of fraud committed by their referral partners or if they have a hint that a fraud has been committed by the latter, then they have to immediately end that partnership.

“SEBI does not require the brokerages to have a referral partner, the brokerages have referral partners to draw traffic. Therefore, the brokerages are free to end their partnership whenever they believe there has been a fraud committed by the other,” she said.