Super30: Two leading brokerages keep an illegal investment advisory afloat

According to Anand Kankani, a practicing company secretary who specialises in securities law, though Baid isn’t asking people to pay for stock tips, this arrangement is still a violation of the Investment Advisor (IA) Regulations and the partner brokers could be seen as violating the code of conduct under the Sebi (Stock Broker) regulations for not upholding their fiduciary duty.

“If anyone who is not Sebi-registered gives investment advice for a consideration, it is a violation of the IA regulations. In this case, even though the compensation is coming from a third-party (the broker) and not directly from the end-user, it can be seen as consideration earned from the unregistered investment advisory,” he said.

Moneycontrol reached out to the two brokerages and Baid for their responses.

Zerodha’s spokesperson said the company would send a notice to the referral partner and wait for two weeks to see if Baid stops giving stock or investing tips through her posts. If she continues with the same kind of messaging, they would block Baid from the referral programme, the spokesperson said.

Angel One is yet to respond to the queries and the article will be updated once it does. Baid did not respond to our queries but has since taken down most of the posts advertising the group and the stock tips.

Her posts on Super30 said that it was a free group and that people joining it would get access to strategies and would be able to trade with Baid.

Even the promise of trading with Baid in the live market could be seen as investment advice, a legal expert said.

Baid also uses stock tips to drive engagement on her social media channel during popular events. During the recent Cricket World Cup, Baid posted that she would share two “long-term” stock ideas if India would make it to the semi-finals, which she later did.

Then during the World Cup final, she said that she would share stock tips for every two Australia wickets to fall.

Also read: MC Investigation: Zerodha, Angel One, Motilal among brokers in ties with illegal advisors

She shared only one even though Australia lost four wickets as they easily overhauled India's total of 240 to lift the men's World Cup for the sixth time.

The arrangement between Baid and the brokerages is of the kind that the Securities and Exchange Board of India (Sebi) has been trying to break. In a consultation paper released on August 25 speaks of the association between Sebi-registered entities such as stock brokers and unregistered entities such as finfluencers.

(Update as of December 19, 2023: Zerodha later responded to the story with this comment: "She is not registered with us. We don’t want to say anything else.")