Impersonation And False Promises: Sebi Cautions Against Rising Social Media Stock Market Scams – Here’s How To Protect Yourself

Sebi News: The Securities Exchange Board of India (Sebi) has cautioned investors against the rising menace of stock market scams that are being carried out via social media platforms. In a press release, the market regulator shed light on how some ‘unscrupulous’ entities are using social media platforms to entice and deceive gullible investors in the securities market.

“It  has  been observed  that  such entities use strategies to induce investors into trusting them by gaining their confidence,” Sebi said in its press release dated May 21.

How Scammers Build Investor Trust

According to the regulator, these unscrupulous entities often impersonate Sebi-registered intermediaries, public figures, or top executives of reputed firms to gain the trust of unsuspecting investors. These fraudsters and scammers typically send unsolicited links to invite investors to join WhatsApp groups, branding them as “VIP Groups,” “Free Trading Courses,” etc., where they showcase fabricated success stories and testimonials to create a false sense of credibility.

“These entities create fake profiles that portray them as experts in the securities market. Many times these entities impersonate Sebi registered intermediaries, well-known public figures, celebrities, CEOs/ MDs, etc. of established organisations. They exploit investors by showcasing fake testimonials of achieving huge profits from other group members who play a supporting role in these scams,” Sebi said.

The regulator further explained that once people are convinced, they are tricked into transferring money to the fraudsters’ bank accounts, believing that they too can earn big profits like the fake ones shown in the group.

How To Protect Yourself From Such Scams

Sebi has urged investors to remain vigilant to not trust such unsolicited messages from unverified people and refrain from joining such WhatsApp groups or communities.

The regulator has advised investors to instead deal with only Sebi-registered intermediaries and through authentic trading apps. It also urged investors to verify the credentials of financial entities through the official Sebi portal (www.sebi.gov.in/intermediaries.html) and transact only through authentic trading platforms listed on Sebi’s investor support site (https://investor.sebi.gov.in/Investor-support.html).

The market regulator also advised investors to interact only with genuine social media handles of Sebi-registered intermediaries.

The caution comes amid a surge in such scams in recent years. Sebi has recently taken action against individuals like Asmita Patel, Baap of Charts, and Mohammad Nasiruddin Ansari, who used social media to lure investors with fake credentials and false promises to dupe them.