How finfluencers use fake screenshots to run scams

Finfluencers are back in action, with fake screenshots, telegram channels and even mentorship. (iStockphoto)
Finfluencers are back in action, with fake screenshots, telegram channels and even mentorship. (iStockphoto)


Stock tips on Telegram channels offer ‘support and resistance’ instead of ‘buy and sell’ options

Finfluencers are back in action, with fake screenshots, telegram channels and even mentorship. Ask Mayank Saw, a commerce student from Dhanbad in Jharkhand. Saw spent 14 months trying to time the market but was unsuccessful. Frustrated, he turned to Youtube videos to check if he could get any leads. That’s when he stumbled on a video posted there by Abhishek Kar, showcasing screenshots of the lakhs of rupees in profits that he had made by trading in derivatives.

Saw was impressed and bought a pass to Kar’s premium Telegram channel by paying 17,049. The payment was done through Rigi, an app made for creators to sell their financial courses and Telegram channels. These channels came out with recommendations or stock tips for subscribers on buy and sell options daily. Saw, however made a minor loss in the market based on these calls and thereafter ‘muted’ the channel, preferring to rely on his own research for stock trading.

Kar, meanwhile, is being called out on social media for putting up fake trading screenshots to lure people into joining his paid courses and telegram channels. His actual income statement that got leaked on social media showed a loss of 1.07 crore made by trading in derivatives from FY21 to FY22.

Another trader, ‘Ghanshyam Tech’, was also questioned on social media for putting up fake trading videos. What gave the game away was a video of him claiming to book profits when his console showed ‘buy’ and not sell orders. In another instance, he was accused of showing only profitable trades in a particular account and hiding losses from other accounts. Another video surfaced of him where he attached his verified P&L (profit and loss) statement in Youtube description which showed 72 lakh in losses from 1 April to 30 September 2021. These videos were promptly deleted.

In his response, Kar told Mint that he has been vocal about his losses quite often and that people did not subscribe to his course due to profit screenshots but for his knowledge. “My intent has always been educational. I have been wrongly accused with misinterpretation of facts." said Kar. As for the Telegram channel, he said, “No buy or sell recommendations were provided, it’s just a conspiracy. There were even disclaimers put up in this regard at the time of downloading access to the Telegram channel."

Ghanshyam Tech did not respond to Mint’s queries.

How finfluencers game the system
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How finfluencers game the system

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The phenomenon of fake trading screenshots and fake trading videos (sometimes generated from apps that clone those of brokers like Zerodha) stems from the rapid growth of financial influencers or ‘finfluencers’ in India’s social media space. Finfluencers who are able to garner large followings through such screenshots receive revenue from affiliate links or marketing links provided by the brokers. Such social media finfluencers also up-sell trading ‘courses’ to their followers.

“Today it may be Ghanshyam or Abhishek Kar, tomorrow it could be someone else," said Bandi Shreyas, a Bengaluru-based trader who has been vocal about finfluencer malpractices on social media. “The problem is not the individuals. It is the system of affiliate links that incentivizes traders to share such screenshots."

Shreyas said that finfluencer-traders earn huge commissions through such links. Often, they ask subscribers to start a brokerage account vide the affiliate link—a precondition to joining their telegram channel or paid courses. For instance, Saw said Kar was offering a basic paid course for free to anyone who opened a brokerage account through his affiliate link with broker Dhan.

Shreyas, said that providing tips through telegram channels allowed finfluencers to carry out de-facto investment advisory. “Tips groups are run in the name of mentorship/ education; many of them are on a platform called Rigi," he said.

To be sure, after market regulator Sebi started clamping down on unregistered entities giving stock tips, many finfluencer-trader changed their modus operandi and started giving indirect tips. This they did by switching the words ‘buy’ and ‘sell’ with ‘support’ and ‘resistance’ or show people what they bought and sold without explicitly telling them to do the same. For instance, Kar sent support and resistance levels daily to his Telegram subscribers.

In response to a Mint query, Rigi said: “In our public declaration dated 29th May, we have unequivocally distanced ourselves from people who use our tools to provide unregulated stock advisory. As a commitment to maintaining a trusted platform, Rigi has introduced self-imposed regulations for finfluencers, thereby becoming the first platform in India to take such a massive step. Despite potential business implications, we recognize the broader responsibility of ensuring that our platform isn’t misused for unregistered stock advisories."

Unregistered PMS

Another problem is that of authorized persons, or APs, managing client money in a structure akin to a portfolio management services (PMS) but without a Sebi license. Sub-brokers or APs would get people to open an account with them and get a dashboard where they can control the trades of affiliates. Some of them would then go on to make informal contracts with the sub-broking clients to manage their money.

According to insiders Mint reached out to, these unregulated PMS managers would charge 15-30% of the profits earned from clients. That’s the average industry standard. “These people (sub-brokers) earn money regardless of what happens to the trade as they are entitled to their brokerage commissions," said Shreyas. Clients pay this profit sharing amount either in cash or as consultancy charges. "Clients who are unhappy can’t approach courts as this is an informal arrangement."

According to an email accessed by Mint, PR Sundar’s Mansum Consultancy was seen offering such a PMS with a minimum ticket size of 1 crore. It had declined a client’s request to manage money (in 2022) because of a staff shortage. “We will get back to you regarding this query. Kindly note that the minimum capital to avail our PMS services is INR 1 Crore. If you can manage to get that capital, we can set up a phone call with our Operations Manager Mr. Sharath," said the email.

PR Sundar, in his response to queries by Mint, said, “I do not have any license for PMS or AIF. However, I am running a mentorship program where people stay with me for sometime to learn trading and they trade themselves." He added, “Probably my office people did not know the difference and might have loosely used the word PMS instead of Mentorship. I regret the mistake done by my office."

There is another way to transfer money: through illiquid options. They target illiquid stock options where there’s little to no oversight. For instance, if an option’s fair value is 100, they would place an order for 200 using the customer’s account. Then, they place a matching sell order from their own account, pocketing the profit discreetly. This tactic allows them to exploit unsuspecting customers who are unaware of the true nature of their losses.

Faking income and lifestyle

Financial experts have pointed out the use of fake trading screenshots and luxurious lifestyles by finfluencers to lure people.

India’s largest broker Zerodha and Sensibull (a start-up with a Zerodha tie-up) offers a ‘verified P&L’ mechanism in which traders can share their verified profit and loss statements, as proof of expertise or success. However, Ashish Nanda of Kotak Securities is sceptical. In a post on X, formerly Twitter, on 29 August, Nanda pointed out that brokers can only verify the P&L of the account held with them. They cannot do so for accounts held with other brokers, and the ‘verified’ tag for broker can be misleading (as they can have multiple accounts). Similarly, when people migrate their DP account (the account in which shares are held) from one provider to another, the new DP and broker has no way to verify the cost price of shares held with the previous broker.

Sebi has proposed a consultation paper that would stop regulated intermediaries from partnering with finfluencers. This would also affect the affiliate link model. Nithin Kamath, CEO of Zerodha welcomed the paper, but was quick with a caveat. “The latest SEBI consultation paper on this is probably in the right direction. That is, disallow any registered intermediary with SEBI to associate in any way with anyone who is acting like an advisor or analyst without being registered. This can potentially put an end to anyone mis-selling that it is easy to make money trading the markets," Kamath said in a blog post. However, he added that, “The broking industry has thousands of people who rely on introducing customers by being APs, partners, etc., for a living. This is how our markets grew and how the industry has operated from the start. Their contribution has dipped as the world has moved online, but they still matter in smaller cities and towns. Regulations made for a few people who are mis-selling can hurt the livelihood of this entire industry and sector that depends on revenue from introducing customers to brokers. The solution to this isn’t as easy if you think of the overall structure of the capital markets. Also, as I mentioned earlier, the majority of our referral customers are from individual customers and partners who are not the Finfluencer types." Kamath had previously told Mint that Zerodha shares about 10% of revenue with those who have affiliate links of the brokerage.

India has witnessed a huge increase in the number of demat accounts and first-time investors over the past 2-3 years. The pandemic forced people to remain at home and stock-trading is one of the activities that blossomed in this restricted environment. However, many of these traders are being served by unregistered finance content creators rather than India’s 1,300-odd Sebi Registered Investment Advisors ( who are authorized to give investment advice. This has greatly magnified the risk of fraud and a breakdown of trust in the system. The Sebi proposals to curb this risk can go a long way in de-risking this market.

Another thing working in favour of trader-finfluencers is that they can delete or block user comments on Instagram and Youtube. That way, they can completely mask negative publicity “It’s not about big scams anymore" said Shreyas, whose twitter account (146,000 followers) regularly confronts finfluencers. “It’s about many micro scams and it’s depressing."

Akshat Rohatgi contributed to this story.

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