SEBI busts ‘Research Analyst’ who was actually running a grocery shop

SEBI

• SEBI cancels research analyst registration of Madurai grocery store owner
• Purooskhan's SEBI registration misused by Option Research Company for fraud
• SEBI acted after complaints of fake investment advice and financial losses

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In a startling case that left even the regulator astonished, market watchdog Securities and Exchange Board of India (SEBI) has cancelled the registration of a so-called research analyst who, in reality, had nothing to do with the securities market and was instead running a tiny 100-square-feet grocery store in Madurai.

SEBI revoked the licence of Purooskhan, who was officially registered as a Research Analyst but was found to be selling daily essentials, snacks and provisions rather than offering market research or investment advice. The Quasi-Judicial Authority in the case himself expressed surprise at how such a person managed to secure registration with the regulator in the first place.

SEBI’s quasi-judicial authority Santosh Kumar Shukla noted in his order, “During the hearing through virtual mode, it appeared that the Noticee is not conversant with securities market activities and he runs a small provision store selling daily essentials, snacks, etc. It could not be reasonably gauged as to how such a person was having registration as a Research Analyst”.

Shukla further recorded, “The Noticee submitted that he is running a small business and does not undertake any research analyst activity”. Based on these findings by the designated authority, SEBI cancelled Purooskhan’s research analyst registration.

The case traces its origin to a complaint received by SEBI in June 2022 on its SCORES platform against a website, www.optionresearch.in, which promised “sure shot” calls, claimed zero risk and assured investors of doubling their capital. The complainant paid Rs 50,000 in fees, availed services from the website and eventually suffered losses of around Rs 4 lakh.

Following the complaint, SEBI initiated an examination and issued a notice to Purooskhan. He told the regulator that his SEBI registration number was being misused and claimed he had nothing to do with the website. He submitted copies of a police complaint filed against Option Research Consultancy with the Tamil Nadu Police on September 27, 2022, and another complaint lodged with the Cyber Cell on October 11, 2022 under the category of online financial fraud.

However, SEBI observed that the Option Research Company (ORC) website offered multiple paid investment advisory packages and projected itself as a SEBI-certified entity, prominently displaying Purooskhan’s registration number. SEBI in show cause notice alleged that ORC had been allowed by Purooskhan to use his research analyst registration details and that he had also shared his email ID and password.

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Purooskhan subsequently claimed that G Faheeth Ali, one of ORC’s partners, had approached him posing as a bank employee and seeking to fill a vacancy for a research analyst. In that guise, he allegedly obtained photocopies of certificates and personal details, which were later misused. After SEBI began probing the matter, ORC reportedly issued an appointment letter to Purooskhan, naming him compliance officer and authorising him to issue trading calls — an offer he said he declined.

Notably, in the same matter, the adjudicating officer had earlier given Purooskhan the benefit of doubt and closed the case without imposing any monetary penalty.

Another order was passed in August last year, wherein, a direction of refund of Rs. 30.39 lakh and debarment from accessing the securities market for a period of two years was passed. A monetary penalty of Rs. 6 Lakh each was also imposed on the related entities.

This time, however, SEBI chose to pull the plug on his registration, bringing the unusual “grocery store research analyst” episode to a close.

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