To invest with these unregistered entities, which have been offering astronomical returns, people have been moving from safer options and even taking out loans.  

Her history has been mainly quiet. Shevagaon lies in the Ahmednagar district of central Maharashtra. Renowned for its cotton commerce and sugarcane cultivation, the Thesil gained notoriety in the 1970s due to flooding caused by the overflow of the Jayakwadi Dam and recently due to an uncommon altercation among the residents in 2023. 

Shevgaon faces a new challenge from the sub-brokers running illegal portfolio management services (PMS) and promising people the stars.

Money is moving toward safer options like bank deposits and away from more conventional investments like real estate.

Financial advisor Hitesh Oberoi, based in Shevgaon and Ahmednagar, told Moneycontrol that “most people I know have withdrawn their fixed deposits and are dabbling in the equity markets for better returns.”  

More concerningly, individuals borrow money to invest with these illegal PMSs by taking out loans against gold and real estate. What is worse about this is that these arrangements are causing severe financial losses, thuggery, and suicides.  

Who owns these illicit businesses? 

Twenty-five-year-old Sai Kawade is one of the dream sellers. With a bold marketing campaign for Asitech Portfolio Management Services, he promises returns of 7 percent or 84 percent annually. Asitech is not a registered PMS and is thus an illegal service. 

In contrast, the top-performing legally registered PMSs in the country generated 50% returns over the previous year. People flock to unregistered entities because of the substantial difference in returns promised; they are often unaware that these are illegal establishments. 

We will update this article with Kawade’s response. 

Kawade presents himself on Facebook as an authorized person at Zrodha, but on Instagram, he appears as an Angel One sub-broker. As stated, Kawade is neither an authorized person nor a sub-broker; instead, Angel One and Zerodha informed Moneycontrol that he is unrelated to their brokerages. 

Unlike other PMS service providers in Shevgaon, Kawade does not transfer the client’s securities into his account. Instead, he asks clients to provide him with their login information, including their username and password and states that he will trade them through the client’s account. 

According to Kawade’s posts, he advises his clients to open accounts with Zerodha because he says he can avoid two-factor authentication with this brokerage’s account. 

Brokers must enable two-factor authentication (2FA), which entails a one-time password and a PIN/Password, before granting a client access to a trading or demat account. Software that gets around this for a Zerodha account, according to Kawade, is available.

According to Zeodha, who told Moneycontrol that there is no way to bypass 2FA on its platform, this is untrue. 

Phantasy luck 

Kawade uses standard techniques to promote his sell puts and call strategy, writing extensively about it on social media and sharing his trading account’s profit and loss (P&L) statements.  

Moneycontrol has written a great deal about how simple it is to create these P&L statements with easily accessible apps. Because statements can appear as though they came from respectable brokerage houses, it is simple to convince investors of them. 

Illegal PMSs typically fall short of expectations. These PMS managers take the capital of another client, promise returns for a few months, and then disappear with the majority of the client’s capital. 

This section of the story has a darker twist in Shevgaon. People have been hiring goons to get their money back from these PMS sub-brokers. 

According to news reports, the PMS managers are killing themselves because they can not return their client’s money, and they fear retaliation. 

Inhumane tactics 

A broker in Shevgaon reportedly ingested poison after investors demanded their invested capital and the promised return, according to a report published in Pudhari, a regional language newspaper in Maharashtra. Embankment of millions of rupees was the charge brought against the individuals in charge of this operation.

According to market insiders, investors are resorting to these drastic measures due to the use of leveraged capital.  

The market watchdog has issued directives prohibiting unlawful PMSs. Through the Sebi Complaints Redress System (SCORES), investors can voice their complaints against registered entities, including the brokerages that have hired these sub-brokers. Additionally, they can file a complaint via registered mail or email to the relevant Sebi department regarding unregistered, illegal PMSs. 

Investors who file complaints with the regulator may also include screenshots of their correspondence with these companies, including call recordings and WhatsApp conversations.