SEBI cautions investors against stock tips circulated through WhatsApp groups

Markets regulator SEBI on Thursday cautioned investors against fraudulent, invitation-only WhatsApp groups offering stock tips and trading calls, warning that operators use fake profit claims and fabricated testimonials to lure unsuspecting investors.

The Securities and Exchange Board of India (SEBI) said certain unregistered persons were posing as market experts and sharing unauthorised buy and sell calls under the guise of free investor education.

The operators, mostly using overseas WhatsApp numbers, enlist certain group members to post false claims of profits and praise the purported experts to make their recommendations appear credible.

The practice, known as "astroturfing", creates a false impression of genuine support and induces investors to act on the trading calls, SEBI said.

The regulator also warned investors about a tactic in which members of such groups are invited to join new groups after the existing ones are suspended following action by enforcement agencies or regulatory bodies.

The messages, usually sent from new numbers, claim that the previous group was banned due to social media platform risk-control measures and promise daily stock recommendations and trading guidance through a replacement group.

SEBI has advised investors not to join invitation-only WhatsApp groups run by unknown persons or individuals claiming to be stock market experts, particularly those operating from overseas numbers.

It also cautioned investors against being influenced by profit claims, messages praising group administrators or trade confirmations posted by other members, which could be planted to mislead them.

“Treat any message claiming that a group has been suspended, closed or banned, and inviting them to join a new group, as a red flags, and exit such groups,” the regulator said.

SEBI advised investors against opening accounts on trading platforms or applications recommended through these groups, transferring money to them or sharing details of their holdings and trading accounts with the operators.

"Deal only with SEBI registered intermediaries and use only authentic trading apps," the regulator said.

Investors can verify the registration status of market intermediaries and check the trading applications of registered intermediaries through SEBI's official investor-support resources.