SEBI alerts investors about stock market scams on social media

The Securities and Exchange Board of India (SEBI) on Wednesday warned investors about a growing number of stock market scams being perpetrated through social media platforms, urging them to exercise caution while dealing with unverified entities online.

The market regulator said that certain unscrupulous entities are exploiting social media to deceive investors by luring them into fraudulent trading schemes. These fraudsters typically send unsolicited invitations via links to join WhatsApp groups under the guise of offering "VIP access," "free trading courses," or guaranteed returns.

“These entities create fake profiles that portray them as experts in the securities market,” SEBI said. “Many times these entities impersonate SEBI registered intermediaries, well known public figures, celebrities, CEOs/ MDs, etc. of established organisations.”

They also showcase fake testimonials and fabricated success stories to win investor trust before tricking them into transferring money, the regulator added.

SEBI advised investors to avoid engaging with unsolicited messages from unknown individuals or joining dubious WhatsApp groups or online communities. It urged investors to verify the registration status of any intermediary via the SEBI website and to use only authentic trading applications provided by registered entities.

“Investors are hereby alerted to communicate only with genuine social media handles of SEBI-registered entities,” the statement read.

The regulator said the advisory aims to create awareness and safeguard the interests of investors amid a rise in cyber-enabled financial frauds.