SEBI Warns Investors Against Stock Market Scams On Social Media

The Securities and Exchange Board of India issued an advisory on Wednesday, urging investors to stay alert against stock market scams on social media platforms.

Investors have been advised to deal only with SEBI-registered intermediaries. The capital markets regulator has also asked investors to verify the registration status of any intermediary at its website before investing. SEBI advised investors to interact only with genuine social media handles of registered market participants.

The advisory comes in the wake of several instances where entities have used social media platforms to mislead investors. These entities often send unsolicited links inviting people to join WhatsApp groups with names like "VIP Group" or "Free Trading Courses".

Scammers use fake profiles and pose as market experts. In many cases, they impersonate SEBI-registered intermediaries, public figures, or senior executives of well-known companies. They share fabricated testimonials showing high profits, often supported by group members who are part of the scam, the regulator warned investors in its release.

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

"They exploit investors by showcasing fake testimonials of achieving huge profits, from other group members who play a supporting role in these scams," the regulator added.

Such tactics are designed to win investor trust. Victims are then persuaded to transfer money to the scammers' accounts with promises of high returns. SEBI has warned that these returns are fraudulent.

The regulator has cautioned investors not to trust unverified messages or join unknown WhatsApp groups. It emphasised the importance of due diligence and using only verified channels for trading in the securities market.