A Securities and Exchange Board of India order cancelling an over seven-year-old registration of a Madurai-based research analyst (RA), found running a grocery shop, has shed light on regulatory oversight and how misused credentials can enable investor fraud.
In an order dated December 12, Sebi cancelled the registration of Purooskhan after he was found running a small store selling daily essentials and appeared largely unfamiliar with securities market activities.
Sebi’s quasi-judicial authority Santosh Shukla, who issued the order, however, noted that it was “not reasonably gauged” how such an individual came to hold a research analyst licence.
Shukla stopped short of probing the registration process, which was not a
matter of investigation before him.
According to Sebi’s regulation, an RA provides research services, which include the preparation or publication of research reports for investors, making “buy/sell/hold” recommendations for stocks, giving price targets or stop-loss targets, offering advice on public offers and recommending a model portfolio. However, RAs cannot execute trades on behalf of investors.
Market observers were baffled by how an individual claiming to run a grocery shop could hold an RA registration, as the prerequisites for becoming an RA were strict.
Individuals with a postgraduate degree or diploma in either finance, accountancy, business management, commerce, economics, capital market, financial services or completing a postgraduate programme from the National Institute of Securities Market (NISM) qualify to become an RA.
Graduates applying for an RA registration need to have at least five years of experience in the financial services sector.
But the five-year experience requirement was relaxed in 2024 to encourage more individuals to become RAs, said a senior executive of a city-based capital market firm. “This development also underscores how the misuse of regulatory credentials can facilitate large-scale investor deception,” he said.
Modus operandi
The Madurai case traces its origin to complaints received by Sebi in 2022 and 2023, alleging guaranteed and “sure-shot” options trading calls with no risk and doubling of capital amount, offered through a website, optionresearch.in, which claimed Purooskhan’s Sebi registration number to lend credibility.
Payments collected from investors were routed to bank accounts held by a partnership firm, Option Research Consultancy (ORC), formed by three individuals — G. Faheeth Ali, Fathima M. and M.S. Ahammed Ali, none of whom were registered with Sebi.
While Purooskhan maintained that his registration details had been misused without his consent and stated that he had lodged police and cybercrime complaints, Sebi’s designated authority flagged serious lapses. These included his admission that he had shared the password of his registered email ID — a key authentication channel with Sebi — with one of the ORC partners (Faheeth Ali), effectively allowing third-party access to regulatory communications and enabling misuse of his credentials.
Separate proceedings against ORC and its partners concluded in August 2024, with Sebi ordering a refund of over ₹30 lakh to investors, imposing monetary penalties and barring the entities from accessing the securities market for two years.
In Purooskhan’s case, although an adjudicating officer gave him the benefit of doubt on allegations of collusion and monetary gain, Sebi proceeded with the cancellation of registration, citing investor protection concerns and the threat posed by such conduct to orderly market functioning.
