Sebi cautions investors against fraudulent stock-tip WhatsApp groups
Sebi noted that members are often contacted from a new number and invited to join another group, with operators claiming that the previous group had been banned due to social media platform restrictions.
The Securities and Exchange Board of India (Sebi) has issued a caution to investors regarding fraudulent WhatsApp groups that disseminate stock tips. These groups utilize astroturfing, a deceptive practice of creating false endorsements and profit claims to appear credible, in order to lure unsuspecting investors. Sebi stated that certain unregistered individuals are offering stock recommendations to investors through invitation-only WhatsApp groups, posing as market experts from overseas numbers.
The fraudulent groups employ tactics such as posting false profit claims and praising the expert to make their actions appear genuine. Sebi noted that after enforcement agencies or regulatory bodies take action against them, members of these groups are often contacted from new numbers and invited to join another group, claiming the previous one was banned due to social media platform restrictions.
An example of such a message cited by Sebi reads, "Due to social media platform's risk control measures, our previous group has been banned. This new group will provide daily recommendations of quality stock information and trading guidance. Please join the group."
Sebi advised investors to refrain from joining invitation-only WhatsApp groups operated by unknown persons or individuals claiming to be stock market experts, especially those using overseas numbers. Investors are also cautioned against being influenced by messages containing praise, profit claims, or trade confirmations from other group members, as these posts could be planted to create a misleading impression.
The regulator also warned investors against opening accounts or transferring money to trading platforms or apps recommended by these groups, and advised them to only deal with Sebi-registered intermediaries and use authentic trading apps.
The regulator urged investors to remain vigilant while dealing in the securities market and to verify the registration status of intermediaries through Sebi's official website.
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