In a first, Sebi punishes finfluencer PR Sundar for violating investment adviser norms

Individuals advising on financial matters, specially investment and the stock market, have become very popular in last five years as scores of finfluencers (financial influencers) have mushroomed across social media platforms. Some prefer to ignore them, some chose to listen to them, and a few take their advice verbatim, but seldom do they check whether they have the qualifications or the necessary certification from Sebi to advise people on financial matters.

However, Sebi in a first has banned a renowned YouTube finfluencer, PR Sundar, barring him from trading for a year and ordering them to pay  settlement and disgorgement amounts after his alleged involvement in violation of investment adviser norms. 

Securities Exchange Board of India (Sebi) swung into action after it received two references alleging that Sundar, under his company, Mansun Consulting, was providing advisory services without obtaining the requisite registration from Sebi. 

A Sebi letter says Sundar was running a website called www.prsundar.blogspot.com through which he was offering various packages for providing advisory services. The fees collected in lieu of the services were received via a payment gateway linked to the bank account of Applicant no. 1, Mansun Consultancy Pvt. Ltd. (hereinafter referred to as ‘Mansun/ company’) held with ICICI Bank Ltd. Mansun was incorporated on June 30, 2017. Applicant no. 2, Mr. P R Sundar and Applicant no. 3, Ms. Mangayarkarasi Sundar, are the promoter directors of the company with  each having 50% shareholding. 

People who believe you, need no explanation.

People who do not believe you, no amount of explanation will help.

So keeping silence, at least for some time, is the best response.

— P R Sundar (@PRSundar64) May 27, 2023

Sebi served a show cause notice dated May 17, 2022, and a Supplementary Show Cause Notice dated November 8, 2022, alleging that the website had a tab titled 'Advisory', wherein in the account opening forms and KYC documents of the Applicants forwarded by the ICICI Bank and Razorpay, it is observed that the type of business mentioned therein is "share marketing consultancy".   

On inquiry, Mansun via email dated March 17, 2022, submitted a list of recommendations provided  by it for the month of January 2021.

Upon analysis of a recommendation, Sebi found that it was related to purchasing/selling/dealing in securities, which were communicated to the clients. 

Therefore, it was alleged that the recommendations  provided by Mansun fall under the category of ‘investment advice’ as defined under Reg. 2 (1) (l) of SEBI (Investment Advisers) Regulations, 2013.

Further, on account of the above activities, it was alleged that the Applicants have engaged in the activities of an ‘investment adviser’ as defined under regulation 2 (m) of IA Regulations .  

After their violation was proved, Mansun has agreed to pay a revised settlement amount of Rs. 15,60,000/-each i.e. a total sum of Rs. 46,80,000/-to SEBI, disgorgement amount of Rs. 6,07,69,863/, including interest @12% p.a. from June 1, 2020, till the date of submission of the RST.

In its order, Sebi also said that the applicants shall refrain from buying, selling or otherwise dealing in securities in India for a period of one (1) year from the date of passing of the Settlement Order (May 25).