SEBI Cautions Investors Against SMS Fraud

The Securities and Exchange Board of India cautioned investors against market manipulation and fraud through bulk SMSes and social media platforms such as Telegram, Instagram, and YouTube.

The warning issued on Wednesday follows a SEBI order on five scrips—Mauria Udyog Ltd., 7NR Retail Ltd., Darjeeling Ropeway Company Ltd., GBL Industries Ltd., and Vishal Fabrics Ltd. Through an interim order on Monday, SEBI restrained 135 entities for price manipulation in these scrips and also ordered the impoundment of Rs 126 crore made by them in wrongful gains.

Earlier, SEBI had barred influencers involved in stock manipulation through YouTube and Telegram channels. A similar warning was also issued in 2020 regarding unsolicited stock tips through bulk SMSes, Telegram, etc.

According to the regulator, the modus operandi mainly revolved around bulk SMSes. The scheme was undertaken by three sets of entities—PV (price-volume) influencers, SMS senders, and off-loaders. They used a large number of mule accounts to undertake the scheme.

The price-volume influencers jacked up the price through inter-se trades, while SMS sender Hanif Shekh—who was the mastermind behind the scheme—lured investors through bulk messages. Lastly, the off-loaders sold these shares for substantive profit, giving finality to the scheme.

In light of multiple instances of fraud through social media platforms, SEBI has asked investors to be mindful of such fraudulent activities and has advised them to only deal with SEBI-registered intermediaries.