India’s Capital market regulator, the Securities and Exchange Board of India (SEBI), has taken strict action against YouTuber Ravindra Balu Bharti and his firm, Ravindra Bharti Education Institute, for running an unregistered investment advisory business. SEBI has barred them from participating in the securities market until April 4, 2025, and ordered the repayment of Rs 9.5 crore, the amount they earned through illegal activities, according to a report from The Times of India.

How the Scheme Operated

SEBI’s investigation revealed that Bharti and his company targeted inexperienced investors by offering unregistered investment advice and trade execution services. With a significant online presence of 1.9 million subscribers across two YouTube channels, Bharti leveraged his influence to encourage high-risk investments while promising substantial returns. However, these promises often came without clear disclosures of the associated risks.

The company employed manipulative tactics, including offering multiple investment plans to the same individuals, which further limited clients' ability to make independent financial decisions. Operating without mandatory SEBI registration, Bharti’s firm violated securities regulations and neglected its fiduciary duties to act in the best interests of its clients.

Penalties Imposed on Bharti and Associates

In addition to ordering the repayment of Rs9.5 crore, SEBI has banned Bharti, his firm, and their associates from engaging in any securities market activities until April 2025. It has  further imposed a penalty of Rupees Ten lakh on Bharti and his associates for their misconduct.

This decisive action underscores SEBI’s commitment to holding individuals and entities accountable for violating securities laws and engaging in fraudulent practices.

SEBI’s Rules for Financial Influencers

To protect investors, SEBI has implemented stricter regulations targeting financial influencers, often referred to as “finfluencers.” Regulated entities such as brokers and mutual funds are now prohibited from associating with unregistered financial influencers for marketing or promotional purposes. This includes financial transactions and client referrals facilitated by such influencers.

Financial influencers engaged solely in investor education are exempt from these restrictions, provided they avoid specific investment recommendations or guarantees of returns. Those offering investment advice or recommendations are required to register with SEBI, ensuring accountability and adherence to industry standards.

Registered financial influencers must include their SEBI registration number, contact details, and disclaimers in their content. They are also required to follow a code of conduct defined by SEBI and other regulatory authorities. Unregistered influencers, meanwhile, are prohibited from making explicit claims about returns or performance to protect investors from misleading information.

SEBI’s Efforts to Regulate Financial Advice

SEBI has been proactive in enforcing these norms, with over 15,000 unregulated entities having their content removed from social media platforms. This initiative is part of a broader effort to regulate financial advice and safeguard investors from fraudulent practices.

By tightening these regulations, SEBI aims to foster a more transparent and secure environment for investors while ensuring that financial influencers operate within the bounds of the law.