The Securities and Exchange Board of India (SEBI) has impounded bank accounts of two individuals from Surat for running an unregistered investment advisory firm which widely used WhatsApp to give trading tips and stock specific recommendations. (read the SEBI order here)
Bank accounts held by Mansoor Rafiq Khanda and Firoz Rafiq Khanda, who collected subscription fees from duped investors, had deposits worth over Rs 3.83 crore. Accordingly, SEBI said that the unlawful gains made by the subscriptions would attract a simple interest of 12% which translated to around Rs 1.2 crore. Therefore, the total funds impounded by SEBI is Rs 5.04 crore.
SEBI had previously issued an interim order in 2014 against the Khandas, the proprietors of fullonoption.com (now defunct) India Trading Company, Option & M.C.X King, A to Z solution and Fullon Corporation. The brothers replied to SEBI’s summons in February 2016 saying that they were “not highly educated” persons and had no knowledge what license was needed for the business. They also added that their mother was ill for a very long time and hence could not make it to the summons (we’re not making this up).
The brothers Mansoor Rafiq Khanda and Firoz Rafiq Khanda were proprietors of a number of firms which sent trading tips on WhatsApp from four mobile numbers.
The Khandas had provided investment advisory services to the public by soliciting subscriptions through WhatsApp messages and website containing enticing and misleading claims. Some of them are:
“DEC 2013 SERIES PERFORMANCE REPORT (1) VOLTAS 95 CALL BUY@ 50 PAISA TGT HIT @ 9 PROFIT 8.5 LAC. (2) LT 1100 CALL BUY @ 10 TGT HIT @ 60 PROFIT 6 LAC. (3) NTPC 140 PUT BUY @ 50 PAISA TGT HIT @ 7 PROFIT 14 LAC. (4) TATAMOTORS 380 PUT BUY @ 4 TGT HIT @ 10 PROFIT 5 LAC. (5)APOLLO TYRE 95GT HIT @ 6 PROFIT 5 LAC. (6) TATA GLOBAL 165 CALL BUY @ 30 PAISA TGT HIT @ 1.5 PROFIT 3.9 LAC IN 1 MONTH WITH `50000/- CAPITAL CALL NOW AT 9925305293” (December 26, 2013)
“2 Days Positional Target Hit In ICICIBANK 1140 cal Buy @ 20 Booked Profit @ 40 Total Profit Rs 2 Lakh In Rs 2 Lakh Capital Call Now For Next Tip – Earn More Than 25 To 50 Lakh Per Monthly In Our Super Jackpot Stock-Mcx-Currancy Tips – 9925305293 Www.fullonoption.com Fulloncorp@gmail.com” (December 06, 2013)
“Our Target Complete in Voltas 95 Call Buy At 0.50 Paisa Target Hit 9 Profit 18 Lac In 1 Lac Capital Our Target Complete in HDIL 47.50 Call Buy At 0.50 Paisa Target Hit 4 Profit 8 Lac In 1 Lac Capital 9925305293 Call 9925305293 Www.fullonoption.com Fulloncorp@gmail.com” (November 28, 2013)
Investors across the country were instructed to deposit money into bank accounts of the brothers or entities held by them. While scrutinizing the statements of bank accounts of the proprietary firms of the Khandas, SEBI observed that the funds have been received from investors across various cities in the states of Maharashtra, Karnataka, Tamil Nadu, Gujarat, Chhattisgarh, Andhra Pradesh and Haryana.
It was also noticed that after the funds had been received from various entities in the bank accounts, the same had been withdrawn through self-payee cheques or ATM withdrawals.
The brothers held 15 bank accounts from ICICI Bank, HDFC Bank, Axis Bank and State Bank of India.
SEBI had previously noted that this case is quite similar to that of another operation it had previously taken action against – RightTrade.in, which we had covered here. The individals named in that case were Imtiyaz Hanif Khanda (Right Trade and Sai Traders) and Vali Mamad Habib Ghaniwala (Bull Trader and Laxmi Traders).
SEBI guidelines on social media
In April 2013, SEBI was also looking to issue guidelines to companies on the use of Facebook, Twitter and social media for the dissemination of information to client. SEBI also plans to hire staff to sift through social media for stock market tip offs that could impact the stock prices before official announcements.