SEBI cautions investors against fraudsters impersonating registered platforms, exposes modus operandi
Upstox
2 min read • Updated: April 16, 2024, 4:12 PM
Summary
SEBI has advised investors to stay away from fraudulent trading schemes and apps promising unrealistic returns through block deals and IPO allotments. Investors can verify details of BSE trading members, including their official website links and app details, by visiting https://mock.bseindia.com/members/MembershipDirectory.aspx.
With the advancement in technology, scammers are also finding new ways to defraud people. Recently, the Securities and Exchange Board of India (SEBI) warned investors that it has received complaints regarding fraudulent trading activities in the name of SEBI-registered financial institutions.
Modus operandi of scammers exposed
Exposing the modus operandi, SEBI said impersonators use social media platforms such as Facebook and WhatsApp to trap investors by promising them guaranteed high returns.
Investors who believe they are dealing with legitimate registered intermediaries download the fraudulent app and invest through it.
"However, the reality is that their investments never actually occur on the Stock Exchanges. Instead, these transactions remain as paper trades within the app. When investors try to withdraw substantial amounts, the app suddenly becomes non-functional," SEBI said.
The regulatory body has advised investors to stay away from fraudulent trading schemes and apps promising unrealistic returns through block deals and IPO allotments.
Investors can verify details of BSE trading members, including their official website links and app details, by visiting https://mock.bseindia.com/members/MembershipDirectory.aspx.
Also read: BSE warns of scammers impersonating SEBI-registered platforms; here's how to protect yourself
Recently, a Kolkata resident was duped of ₹20 lakh in an investment scam on WhatsApp, the Times of India reported. The man was enticed by a Facebook advertisement offering a free online trading course and was later added to a WhatsApp group. He was told to invest in a platform only to find out that it was fraudulent.
In another incident, a 34-year-old woman lost ₹25 lakh after an investment agent asked her to deposit money on a fraud third-party app. At the start, the investments yielded health returns. However, her funds were frozen once she tried to withdraw it. The fraudsters had told the woman that the investments were made in a SEBI-registered app, which is in collaboration with two other firms, TOI reported.