Ravindra Balu Bharti, a prominent financial influencer, boasting nearly 2 million followers and formerly overseeing a stock market training institute, has been ordered to surrender “illicit profits” exceeding Rs 12 crore.
The Securities and Exchange Board of India (SEBI) issued an interim directive against an unregistered investment advisory entity called Ravindra Bharti Education Institute Private Ltd (RBEIPL), along with its former director Ravindra Balu Bharti and his wife Shubhangi Bharti, as well as current directors Rahul Ananta Gosavi and Dhanashri Chandrakant Gosavi.
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Ravindra Bharti operates two YouTube channels: “Bharti Share Market Marathi” with 1.08 million subscribers and “Bharti Share Market – Hindi” with 8.22 lakh subscribers.
SEBI has asked them to refund the funds received for investment advisory services and has prohibited their participation in the securities market until further notice.
Key reasons for investigation
According to a report by Moneycontrol, the ongoing investigations by the market regulator indicate that a stock market training institute was serving as a facade for an unregistered advisory service, with support from the office of an authorised individual. An authorised individual typically assists a stockbroker’s clients in executing their trades.
Sebi issued an interim directive due to the regulator’s acknowledgment of the pressing need to intervene, considering the significant influence Ravindra Bharti holds over numerous investors.
What Sebi said?
In the order, the regulator stated, “facts of the case as narrated above glaringly disclose how the investors’ confidence has been compromised and how the systems are being abused for personal gains and attainments by the entities like Noticee no. 1 (RBEIPL) by, devising mischievous ways to circumvent the provisions of laws for their personal enrichment but in detriment to the investors. Guaranteed returns upto 1000% is a clear case of abuse of investors’ confidence in the securities market”.
The regulator initiated an investigation into Balu Motiram Bharati, an authorised individual working for a stockbroker and the father of Ravindra Bharati. As part of this probe, RBEIPL was also scrutinised. The regulator discovered a significant operational overlap between the activities of the authorised individual and RBEIPL.
The authorised individual and the training institute were both functioning from the same location, and it was observed that dealers associated with Balu Motiram were employed by the training institute.
Further overlaps were identified, including instances where the authorised individual’s office facilitated an unregistered investment advisory operated by RBEIPL.
The investigating officials discovered that RBEIPL, ostensibly offering stock market training, was operating an unregistered entity that promised returns as high as 1000 percent. Trades recommended by RBEIPL were executed by the authorised individual’s office, sometimes without the client fully comprehending the transactions.
Advantage of loophole?
Sebi’s investigating officials uncovered a clever workaround devised by the authorised person’s office to bypass a regulatory requirement.
According to regulations, a stockbroker or its authorised person must maintain a record of a client placing an order. This is intended to ensure that the decision to buy or sell a stock originates from the client, as the stockbroker or authorised person is only permitted to execute trades upon the client’s request. However, the authorised person’s office and RBEIPL collaborated to circumvent this requirement.
When RBEIPL advised its client to place an order, it would first contact the client to provide information about the stock recommendation. Subsequently, an individual from the authorised person’s office (operating from the same premises) would contact the client to confirm their order, and this interaction would be recorded to demonstrate that the stock idea was initiated by the client.
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