Abid Ali, an authorised person (AP) of Angel One, has been penalised Rs 9 lakh by the Securities and Exchange Board of India (Sebi) for running an illegal investment advisory service. This decision came following an investigation into Trade 26 Research, an unregistered entity operated by Ali. The Sebi order, issued on May 16, highlighted several deceptive practices undertaken by Ali through his advisory.
The investigation was prompted by a Moneycontrol report in July 2023, which exposed Trade 26 Research’s operations. A month after the report, Sebi conducted a thorough examination, discovering that the entity’s website was no longer active. However, by accessing archived versions, the regulator confirmed that the site had been offering investment advisory services without proper registration.
Further scrutiny of the entity’s bank transactions revealed keywords such as options, stock, tips, and share market, indicating active involvement in providing stock market advice. Despite Ali’s claims that he was unaware of the website’s contents, the regulator dismissed these as baseless. The order pointed out that Ali’s actions were deceptive, as he promised assured returns and consistent profits, concealing the inherent market risks involved.
In his defense, Ali stated that he ran a small clothing store, which suffered due to the pandemic. He claimed to have learned “graph reading skills” from online sources and began investing in the stock market, making modest profits. He asserted that his friends, interested in learning these techniques, persuaded him to conduct classes without compensation. Allegedly, they insisted on paying him as a gesture of goodwill, which led to the creation of the Trade 26 Research website.
Ali argued that the website, designed by a freelancer, was a dummy site that did not generate business. He maintained that the words like “option” and “MCX Bullion” were copied from other sites by the designer. However, he could not provide evidence to support his claim of merely teaching his friends without offering specific investment advice.
Sebi’s order categorically rejected Ali’s explanations, labeling his activities as “non-genuine” and “deceptive.” The regulator noted that promises of guaranteed returns and consistent profits mislead investors, masking the reality of market volatility and risk.
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An interaction with Moneycontrol revealed further dubious claims by Trade 26’s sales representatives, who promised unrealistic returns of 10 percent daily. They claimed an investment of Rs 20,000 could yield Rs 2,000 per day, translating to an implausible 3,650 percent annually. Additionally, the sales pitch included a profit-sharing model where the investor would receive 70 percent of the gains, but the specifics of loss absorption remained ambiguous.
The significance of regulation oversight in the field of financial consultancy is emphasized by this. The Sebi’s action is a warning to anybody engaging in unregistered advisory services to be open and respect laws set for preventing investor loses.
