RA claims "75% accuracy" referred to "timing", not promise of returns; Sebi slaps fine of Rs 7 lakh

The regulator's order also quoted other communications issued by the RA, in which he has referred to his past performance and has used phrases such as "free money for all".

Various social-media posts that advertise stock-tips, trading-calls services make claims of "accuracy" levels. People generally understand these claims to mean the probability of generating a profit from the investing ideas.

But a research analyst, who owns the handle @HarmonicsT on platform X formerly Twitter, claimed that the phrase "75% accuracy" he had used in the description of a subscription plan referred to the "timing" of the calls and "nothing else".

RA Arun N submitted to the Securities and Exchange Board of India (Sebi) that he had used the phrase to convey the "timing in which the calls are made".

It didn't take.

Sebi issued an order on October 24 fining the RA Arun N (INH200007353) Rs 7 lakh.

Also read: Research reports of RAs will not be considered an advertisement, Sebi clarifies

The order said, "it is noted that the mention of 75% accuracy on the webpage of the subscription plan, in the absence of any context, will generally be perceived as the accuracy of the recommendations of the research analyst. Thus, the mention of “75% accuracy” by the Noticee on the subscription web-page gives the impression that 75% of the Noticee’s recommendations can generate returns for his clients."

The regulator's order also quoted other communications issued by the RA, in which he has referred to his past performance and has used phrases such as "free money for all".

In the order, Sebi's Adjudicating Officer Barnali Mukherjee wrote that the RA has "misled the investors and was luring the investors to join his subscription plans".

Another violation on the part of the RA was the outsourcing of a core function of collecting details to complete the Know Your Customer (KYC) formalities.

The regulator found that the RA had outsourced this function to an aggregator platform called Gap-Up.

The order said, "the clients were on boarded through the website of Gap-up and Telegram channel, the Noticee was not having KYC of the clients. He was only in possession of the name, mobile number and email id provided by the clients. Thus, no verification of the client records was carried out by him".