SEBI has issued a formal warning against fraudulent WhatsApp groups that lure investors with fake profit claims and unauthorized stock tips, urging the public to verify all market experts and deal only with registered financial intermediaries.
SEBI Warns Against Fraudulent Stock Trading WhatsApp Groups
The Securities and Exchange Board of India (SEBI) on Thursday cautioned investors against fraudulent stock tips and trading recommendations circulated through invitation-only WhatsApp groups, warning that unregistered individuals are posing as market experts to mislead investors through fake profit claims and unauthorised trading calls. In a press release, the market regulator highlighted that certain unregistered persons are operating closed WhatsApp groups, often using overseas mobile numbers, and offering buy and sell recommendations under the guise of free investor education.
SEBI stated, “The operators of these fraudulent groups pose as market experts, mostly using overseas WhatsApp numbers, and share unauthorised buy/ sell calls in the name of free investor education.” The regulator noted that operators use a deceptive practice known as ‘astroturfing’, in which certain group members coordinate with the operators to post fabricated profit claims and praise the purported market experts. Such activities create a false impression of credibility and encourage unsuspecting investors to act on misleading trading recommendations.
Regulatory Actions and Investor Advisory
Avoiding Deceptive Trading Platforms
SEBI also flagged that when fraudulent WhatsApp groups are suspended following action by enforcement agencies or regulatory bodies, their operators attempt to reconnect with members through new groups. According to the regulator, investors may receive messages stating, “Due to Social Media Platform’s risk control measures, our previous group has been banned.” Such messages subsequently invite investors to join replacement groups promising daily stock recommendations and trading guidance.
The regulator advised investors not to join invitation-only WhatsApp groups operated by unknown individuals or persons claiming to be market experts, particularly those using overseas numbers. It also cautioned against believing profit claims, trade confirmations and messages praising market experts, as these could be planted to manipulate investor sentiment. SEBI further warned investors against opening accounts on trading platforms or applications recommended through such groups, transferring money to them or sharing trading account details and investment holdings. The regulator urged investors to deal only with SEBI-registered intermediaries and verify the authenticity of trading applications through its official websites. SEBI said the advisory was issued to caution investors against acting on stock tips and trading calls offered through fraudulent closed WhatsApp groups and to encourage vigilance while participating in the securities market. (ANI)
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