Citing market regulator Securities and Exchange Board of India‘s (Sebi’s) two recent orders — Trafiksol ITS Technologies IPO and Baap of Chart — Kamath reiterated that shortcut to make a quick buck is the surest way to lose money in the markets.
“SEBI recently passed two orders related to two different scams. In the first scam, an SME company raised Rs 44 crores through an SME-IPO to buy software, among other things. But the company that it was buying software from was a shell company complete with fake financials and a fake list of clients. The second order was against a popular finfluencer who collected Rs 17 crores by selling courses, seminars, etc.,” Kamath tweeted.
“This just proves that old saying: if something is too good to be true, it almost always is. Taking shortcuts to make a quick buck is the surest way to lose money in the markets. We wrote about both scams on the @zerodhamarkets,” the tweet said further, sharing ‘The Daily Brief by Zerodha’ blog post link.
The blogpost calls these two cases, “scams”.
“Let’s start with the first one. Imagine this: a company launched an IPO to raise money, claiming they will use the funds to buy some fancy software. But the catch is, that the software was supposed to come from a third-party vendor, which, as it turns out, was a shell company. The so-called “vendor” had zero ability to actually build or deliver the software they promised,” the blog post read.
“And the unfortunate part is that investors didn’t just buy into this IPO; they oversubscribed it by 345 times. So what exactly happened? Let us take it from the top,” it said further.
The post highlighted three takeaways from the Sebi order viz. no operational capability of the vendor, fabricated financials and bogus client list and suspicious vendor selection process.
Earlier, this week, market regulator Sebi cancelled the SME IPO of Trafiksol ITS Technologies, which was earlier put on hold by BSE pending investigation, and asked the company to refund the money to the investors.
Also Read: Sebi cancels Trafiksol SME IPO, asks company to refund investors’ money
On ‘Baap of Chart’, the post said, “Now, if you thought the SME IPO scams are wild, let me tell you about another shady case that SEBI cracked wide open. This one is about a man known as “Baap of Chart”—a popular financial influencer who promised his followers sky-high stock market returns. It already smells suspicious to us. And if that isn’t enough, check out the entry of this guy in one of his master class workshops”.
“Well, he’s good at making grand entries, but not so good at scamming people. SEBI’s investigation revealed that he wasn’t just giving free advice out of the goodness of his heart, he was running an unauthorized investment advisory service, collecting crores from unsuspecting investors,” the post said further.
Amid a growing influence of financial influencers, capital market regulator Sebi cracked down on Baap of Chart, a popular social media influencer in the trading community, and asked its operators to refund investors who had availed advisory services.
In its order, the regulator barred Nasiruddin Ansari and his associates, who operated the Baap of Chart platform, from accessing the securities market for allegedly providing unregistered investment advisory services and violating market regulations.
Also Read: Sebi orders finfluencer ‘Baap of Chart’ to refund fee collected from investors
Kamath has been writing posts on such fraudulent practices from time-to-time. Recently he posted how fraudsters using AI (artificial intelligence) to scam people would be a dreadful situation, reacting to Rs 91 lakh losses incurred by a Bengaluru-based techie in an online stock market scam.
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