Checking who is advising you
Intermediate · 2 min
Two minutes on a public register settles what an hour of charts cannot.
Everything in the previous lesson took some effort to see. This part takes two minutes and needs no chart reading at all. Anyone who advises Indian investors for a fee has to be registered with SEBI, and the registers are public.
- research analyst
- Someone registered with SEBI to publish views and price targets on shares. They may tell everybody what they think a share is worth. They have to disclose their own holding in it, and their registration number belongs on everything they publish.
- investment adviser
- Someone registered with SEBI to advise you personally, taking your own circumstances into account, for a fee. Advising one person is a separate permission from publishing a view to everybody, and the two registers are separate too.
What to check
- Find the registration number on whatever they sent you. If there is not one anywhere, you already have your answer.
- Look it up on SEBI's own site rather than through any link they gave you. A cloned page is far easier to make than a registration.
- Check the name on the register against the name on the message. Impersonating a registered firm is common, because the number then checks out — it just is not theirs.
- If a second, famous firm is named as a partner, look for that partnership on the famous firm's own website. A joint venture between two large financial companies is not a secret.
What a registered adviser cannot say
Rules change, so treat this as a direction to look in rather than a citation, and check the current position. Broadly, someone registered with SEBI may not promise you a return, may not offer a success rate as an inducement, and may not guarantee you against loss. That is useful in the opposite direction from how it is usually read: a promised hit rate is not the sign of a better adviser, it is the sign of an unregistered one.
Why it is always a share like this one
The case studies in these pitches are rarely large companies, and that is not an accident. In a company whose shares change hands in crores every day, a group of buyers cannot move the price. In a penny share the same group can. A pump and dump needs a share small enough for the organisers' own buying to produce the rise they then point at, and small enough that when they sell, there is nobody on the other side except you.