SEBI Orders Action Against Unregistered Investment Adviser Mohit Gupta of Safe Trading

The Securities and Exchange Board of India (SEBI) has reaffirmed a penalty of Rs 5 lakh on Mohit Gupta, proprietor of Safe Trading, for operating as an unregistered investment adviser in violation of the SEBI (Investment Advisers) Regulations, 2013. The order, which follows a reconsideration directed by the Securities Appellate Tribunal (SAT), retains the penalty under Section 15HA of the SEBI Act, 1992, and forms part of the regulator's intensifying crackdown on individuals and entities that provide investment advisory services without mandatory registration. The case is significant for its implications on the broader finfluencer ecosystem and the boundaries of what constitutes regulated investment advisory activity.

Background of the Case

SEBI's original order dated 27 March 2025 found that Mohit Gupta had been operating Safe Trading as a proprietorship and providing buy-sell recommendations, stock tips, and portfolio advice to retail investors without obtaining the certificate of registration mandated under Regulation 3 of the SEBI (Investment Advisers) Regulations, 2013. The investigation revealed that Gupta collected approximately Rs 23.94 lakh from investors by promising guaranteed returns on their investments. SEBI determined that these activities constituted investment advisory services as defined under the Regulations, regardless of whether Gupta characterised them as "educational" content or market analysis.

Original Penalties and SAT Remand

In the March 2025 order, SEBI imposed multiple penalties and directions on Gupta. These included a direction to refund Rs 23.94 lakh collected from investors, a one-year ban from accessing the securities market (or until the refund was completed, whichever was later), a penalty of Rs 5 lakh under Section 15HA of the SEBI Act for fraudulent and unfair trade practices, and a penalty of Rs 1 lakh under Section 15EB for failure to comply with the registration requirement. Gupta subsequently challenged the Section 15HA penalty before the SAT. In its order dated 21 August 2025, the SAT upheld SEBI's directions regarding the refund of Rs 23.94 lakh and the Rs 1 lakh penalty under Section 15EB but remitted the matter back to SEBI solely to reconsider the quantum of the Section 15HA penalty after granting Gupta a fresh opportunity of hearing.

SEBI Retains the Penalty

Upon reconsideration, SEBI retained the Rs 5 lakh penalty under Section 15HA, observing that the amount represents the statutory minimum prescribed for violations involving fraudulent and unfair trade practices. SEBI noted that statutory minimum penalties cannot ordinarily be substituted with warnings or reduced below the prescribed threshold merely on equitable grounds. The regulator emphasised that Gupta had indulged in fraudulent and unfair trade practices by collecting money from investors under false pretences and had failed to comply with earlier directions to refund the collected amounts. SEBI directed Gupta to pay the Rs 5 lakh penalty within 45 days through its online payment mechanism.

What Constitutes Investment Advisory Activity

The case highlights the regulatory definition of investment advisory activity. Under Regulation 2(1)(l) of the SEBI (Investment Advisers) Regulations, 2013, "investment advice" means advice relating to investing in, purchasing, selling, or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products. Regulation 3 prohibits any person from acting as an investment adviser without registration. SEBI has consistently held that providing specific buy-sell recommendations for securities, whether through social media, messaging platforms, or dedicated apps, constitutes investment advisory activity requiring registration. The regulator's earlier order in a related matter established that even education courses providing buy-sell calls can constitute unregistered investment advisory activity.

SEBI's Broader Crackdown on Finfluencers

The Gupta case is part of SEBI's wider enforcement drive against unregistered investment advisers and finfluencers who target retail investors through Telegram channels, YouTube videos, WhatsApp groups, and social media platforms. SEBI has taken the position that individuals who provide specific securities recommendations to followers, particularly in exchange for fees or subscription charges, are acting as investment advisers and must obtain registration. The regulator has also been examining the role of insider trading violations and market manipulation facilitated through social media channels. Registered investment advisers must maintain net worth requirements, pass certification examinations, and comply with disclosure and conduct norms, safeguards that are absent when unregistered persons provide advice.

Implications for Market Participants

The retention of the statutory minimum penalty sends a clear signal that SEBI will not dilute penalties for fraudulent advisory operations, even on reconsideration. For retail investors, the case serves as a reminder to verify the registration status of any entity offering investment advice. SEBI maintains a searchable database of registered investment advisers on its website. Investors who have been defrauded by unregistered advisers may file complaints through the SEBI Complaints Redressal System (SCORES). Market intermediaries and listed companies complying with SEBI LODR should ensure that their communications do not inadvertently cross the boundary into unregistered advisory activity. Firms should also consider implementing robust anti-bribery compliance programmes and compliance calendars to track registration and disclosure requirements.

Key Takeaways

• SEBI has reaffirmed a Rs 5 lakh penalty under Section 15HA on Mohit Gupta of Safe Trading for operating as an unregistered investment adviser, following a reconsideration directed by the SAT.

• Gupta was also directed to refund Rs 23.94 lakh collected from investors and was banned from the securities market for one year.

• Providing specific buy-sell recommendations for securities, whether through social media, messaging platforms, or apps, constitutes investment advisory activity requiring SEBI registration under the Investment Advisers Regulations, 2013.

• SEBI has held that statutory minimum penalties cannot be reduced below the prescribed threshold merely on equitable grounds.

• Retail investors should verify the registration status of any person offering investment advice using SEBI's searchable database of registered advisers.

• The case is part of SEBI's broader enforcement drive against unregistered finfluencers operating on Telegram, YouTube, WhatsApp, and social media.

The enforcement action underscores the regulatory imperative that all persons providing investment advice must obtain SEBI registration, and that operating without registration will attract stringent penalties regardless of the scale of operations.