Sebi Cautions Investors Against Rise In Market Related Frauds On Social Media

Sebi Circulars: Capital market regulator, the Securities and Exchange Board of India (Sebi), has cautioned investors about the drastic rise in the number of stock market-related scams happening on social media platforms.

Sebi said in a release that it has noticed an increase in such frauds on social media platforms, such as YouTube, Facebook, Instagram, X (previously Twitter), WhatsApp, and Telegram. The market regulator added that such scams are also prevalent on other apps available on the Google Play Store and Apple Store, among others.

Sebi said that scamsters typically entice their victims by giving trading calls under the guise of ‘investor education.’ Additionally their modus operandi also involves providing misleading and deceptive testimonials, promises or guarantees of assured or risk-free return.

Sebi’s List Of Fraudulent Activities

Sebi has categorised these instances of fraud into unregistered investment advisory services provided by entities falsely claiming to be Sebi-registered intermediaries.

Other instances include scamsters using misleading and manipulative content to lure investors into joining private chat groups or channels on WhatsApp/Telegram, such as VIP groups, discounted trading groups, institutional trading groups, and so on.

Some scamsters also claim to entice investors through claims of providing exclusive services. Often these scamsters make false claims of facilitating services, such as offering institutional trading accounts, initial public offerings (IPOs) at discounted prices, block trades at discounted prices, and guaranteed allotment in IPOs.

Sebi’s Advice to Investors
Sebi has urged investors to exercise caution and conduct due diligence to verify the legitimacy of social media handles of entities even if they claim to be Sebi-registered. Sebi emphasised that investors should undertake trading and trading-related activities only with Sebi-registered intermediaries and authentic trading apps.

How To Find Registered Intermediaries and Trading Apps

Sebi has directed all registered intermediaries to use the ‘1600’ phone number series exclusively. Investors should check for the 1600 series phone number to check the legitimacy of their investment advisory. Here’s a step-by-step guide to finding Sebi’s list of registered intermediaries: 

• Go to the Sebi website

• Scroll down to see the ‘Intermediaries/Market Infrastructure Institutions’ widget

• Click on the ‘Recognised Intermediaries’ option

• Select the registered intermediary you wish to connect with and click on the appropriate option