Chicanery Epidemic: How The Use Of Research Analyst IDs Is Fueling Investor Scams

In March, a senior SEBI official disclosed that since October 2024, the market watchdog had removed over 70,000 fraudulent investment handles and misleading posts. Whole-time member Ananth Narayan said this while addressing a room full of registered analysts.

Little did we know that these analysts would become the involuntary parties impleaded in the investor frauds run by nameless scamsters.

As per at least 11 registered research analysts whom NDTV Profit spoke to, research analysts are facing a rampant misuse of their publicly available registration numbers. Nameless scamsters use these registration numbers to defraud unsuspecting investors.

Investors are onboarded through Telegram, Facebook, WhatsApp groups, and spam messages promising assured returns.

“One such instance happened with us a year back when a Kolkata-based investor, who was an MBBS student, told us that someone had used our registration number to defraud him," said Sajeesh Krishnan, MD, AAA Profit Analytics Ltd, a Kerala-based firm.

The student found the advisor's authentic phone number through a website and informed them. The fraudsters used the illusion of the firm's infrastructure, but their own bank account numbers for the transactions with unsuspecting investors.

"However, no proper help is available in such cases. We filed a complaint with the cyber police and informed SEBI about it, and the scamsters stopped using our name," Krishnan said.

When asked about the frequency of such issues, Aashish Rajput, a registered analyst from Delhi, mentioned that this is very common and he too had to file a cyber complaint last year.

"I informed investors through a YouTube video as well... Sometimes, even those running unregistered advisory channels use these registration numbers to scam investors”, he said.

Abhishek Nandan, a Rajasthan-based analyst, mentioned that his registration number was used last year by scamsters. While he informed SEBI about the issue, he is not aware if any action was taken against the scamster. Since no complaint was reported to SEBI by the defrauded investor, there was no way to follow up on the action.

In situations where some action is taken, things remain murky.

Bharti Navlani of ABJ Finstocks, a Gujarat-based firm, mentioned that she had informed SEBI and the relevant exchange about her registration number being used three years ago. She received a response only after two years and the case was never closed properly.

In terms of regulatory guardrails, SEBI's Aug. 4 circular solves some problems but as per legal experts, there is scope for more.

SEBI needs to bring in real-time verification tools like a QR code or API, make it compulsory for analysts to publish their official contact points, and set up a dedicated SCORES option for impersonation cases, said Abhimanyu Singh, partner at KP Associates.

Currently, SEBI’s Aug 4 circular makes it mandatory for analysts to take action if someone creates fake accounts pretending to be them. First, they have to file a police complaint about the fraud. Next, they must contact platforms like Apple, Google, or Telegram and ask them to remove the fake accounts.

The registered analyst also has to post a clear notice on their website, naming the impersonator so people are aware of the scam. Finally, they are required to directly inform their clients to warn them about the fake accounts. This four-step process must be followed in every case.

“What’s lacking right now is a dedicated route for impersonation complaints. Investors should be able to upload all their evidence in one place, which would immediately alert banks and the police,” Singh said.

Amit Tungare, Managing Partner at Asahi Legal mentioned that SEBI must also strengthen verification mechanisms — for instance, by mandating OTP-based or QR-linked validation of an analyst’s credentials.

Research analysts can also send out alerts to their client base, advising them to verify communications directly with the official contact person, and not to trust any suspicious communication, said Akshaya Bhansali, Managing Partner at Mindspright Legal.

As per Manish Chhagnani, partner at The Law Point, SEBI may enhance the role of BSE Administration & Supervision Limited (BASL) which has been recognized as Research Analyst Administration and Supervisory Body (RAASB).