Fraud Alert: Stock Investment Scams with Assured Bumper Profits
It is a standard bus stop in a city. One person with a red velvet rope creates a section for seating at the bus stop. He labels it as a VIP section and charges a fee. Three curious commuters pay the charges and tightly sit on the bench meant for two people. This is a prank played out on Discovery Science. This clip is played several times on the TV channel. It highlights that we all have an innate need or craving for self-esteem and status—even in questionable circumstances. 
 
Similarly, when Prasad (name changed) was added to a WhatsApp group created for VIPs with a label 'by invite only', he felt like he had 'arrived'. Before he realised what was happening, he was lured into investing money to earn bumper profits in stocks, specifically selected and recommended by the 'Maha-genius, financial tycoon' who is propagated to have 'created a tsunami in Indian stock markets'. 
 
Prasad was shown earning the 'bumper' profit on his investment in the super-duper multi-bagger stock into which he has plonked money. After that, he was nudged to make a bigger profit by joining an exclusive club meant for joint trading, guided personally by the 'genius'. This financial tycoon also told Prasad that he was in the process of launching his own private equity fund of Rs1,500 crore and needed 'smart' people like him to invest and earn huge returns.    
 
 
He also claimed that three institutions had invested Rs680 crore in his venture. He claimed that 8,200 members from his 'Investor Alliance' had contributed Rs260 crore and he needed a further Rs560 crore from new, intelligent investors like Prasad.
 
Prasad is a small-time investor who happens to know the rules and regulations governing stock market investment. So he soon realised that this bumper profit he had earned was nothing but a 'pump-and-dump' trading operation carried out by the 'financial tycoon' and his gang. In pump-and-dump operations, share prices of specific companies are inflated by creating artificial trading volumes and then dumped when gullible investors start buying the scrip. Prasad came up with a clever plan to get his money back. He told the operators that he wanted to invest more funds but, before transferring money, he needed to see the profit he earned from his first investment in his bank account. It worked, and once his money was credited, he blocked all accounts operated by the financial tycoon and his gang on WhatsApp and Telegram.
 
I came across another such 'investment scheme' on Telegram offering guaranteed returns. The group, 'Bharat Trading Yatra' offers two schemes: one is to invest a minimum Rs40,000 and earn 20% to 30% daily and the second is to invest from Rs15,000 to Rs1 lakh and earn a daily profit of Rs5,000 to Rs25,000. The condition was that the investor would need to share the profit with Bharat Trading Yatra as account handling service charges. While this group is on Telegram, the next step to investing requires you to connect to WhatsApp number 787812767. This number is registered in Rajasthan and appears as 'Stock Market' on Truecaller. 
 
 
These are just two examples of the many investment scams that are running wild on social media platforms. While honest advisers are burdened with onerous compliance rules set by the Securities and Exchange Board of India (SEBI), those offering anonymous stock tips and investment schemes are able to go scot-free without severe punishment. In most cases, SEBI bars these people from markets while asking them to return the money to the investors. Unfortunately, this has no significant impact since these fraudsters often operate as a gang. When one entity faces the music(!), another continues to thrive (read: cheating and duping investors).
 
A few days ago, SEBI expressed concern over unscrupulous entities and online platforms falsely claiming to be registered intermediaries and offering huge returns and urged investors to exercise utmost vigilance and due diligence before entrusting their funds to any such entity.  
 
However, SEBI's action against the fraudsters offering super-profits on social media falls way short of the number of such operations that are proliferating. The regulator has often urged investors not to invest with unregistered intermediaries, but instead of  'caveat emptor' or investor beware –  greed takes over and leads to losses.
 
From October 2013, only those registered with SEBI are permitted to offer investment advisory services. However, we note that there is at least one SEBI order every week against an entity offering illegal investment advice. The risk-reward ratio is seen as favourable by fraudsters, who continue to launch new groups or channels on social media to lure investors with the promise of bumper trading profits. 
 
In its January 2022 order against a Telegram channel called Bullrun2017, SEBI said, "Social media channels are being exploited for such fraudulent, deceitful, and unfair trade practices. Common investors should be cautious of being enticed by such schemes and it may be prudent to independently research investment opportunities."
 
Debashis Basu, editor of Moneylife, wrote in his December 2022 column that the regulator's job ends with rulemaking; it is not accountable for the outcome of the rules or their impact on the growth of the business. On the other hand, despite these rules, illegal advisory services are thriving. (Read: Has SEBI Lost the Battle against Finfluencers and Illegal Advisers?)
 
Having said that, monitoring social media on a 24x7 basis and tracking fraudsters is quite difficult for regulators and law enforcement agencies (LEAs) since criminal gangs keep changing their Telegram and WhatsApp groups. Perhaps the use of artificial intelligence (AI) tools, machine learning (ML) and large language models (LLMs) could help. SEBI's annual reports claim that it is already being done, but clearly more is needed.
 
Until that happens, here are a few suggestions for anyone interested in investing in the stock market...
 
1. Never invest in a product that you do not understand. The same applies to the scrip of a company whose business you do not understand. 
 
2. Nobody earns quick and bumper profit from stock market investment in a day or two. Any investment, including the stock market, must be for the long term to give you returns that are at least on par with other investment products available in the market.
 
3. Ask, check and verify credentials, including the SEBI registration details of the person offering your investment opportunity.
 
4. Also, ask yourself why the person is so big-hearted to offer the opportunity to earn bumper profit to some unknown person like you and not using it for himself to reap the benefits.
 
5. Be cautious of any entity that promises assured or exceptionally high returns. The principle of 'higher returns come with higher risks of losing your money altogether' holds true in the securities market.  
 
6. Knowledge is your best defence against any fraud. Empower yourself with knowledge about the securities market for a safer investment journey. 
 
7. Do remember, if the entity you are dealing with is registered and regulated by a regulator, there is some scope for you to get justice and maybe your money invested. In other words, dealing with an unregistered and unregulated entity means you are saying goodbye to your hard-earned money. 
 
Be sceptical and cautious to keep your money safe.
 
How To Report Cyber Fraud?
 
Do report cybercrimes to the National Cyber Crime Reporting Portal http://cybercrime.gov.in or call the toll-free National Helpline number, 1930. To follow on social media: Twitter (@Cyberdost), Facebook (CyberDostI4C), Instagram (cyberdostl4C), Telegram (cyberdosti4c). 
 
 
If the fraud is related to your bank account, you need to immediately send an email to the official email ID of your branch (you can find it on the bank's website or your passbook) with a copy to the bank's customer care. Even if you have called the official number for customer care, you must still send an email describing your conversation with the bank executive, along with the time, date, and duration of the call. This will be helpful if you face a liability issue with the bank.
Comments
pratikpatel271992
3 months ago
I am also facing the same Scam in Institutional Account. I have joined through Facebook. One is BlackRock's Z38 Jonathan Simon Stock Exchange Elite Club,BPEA EQT,KKR,SSGA whose motto is a Profit Making Plan. They get opened Institutional Account on their Designed Platform in terms of Mobile Application. They get deposited in others Account which is not relevant to the above said Agencies. Once deposit is completed, credit shows in Your Institutional Account. They get started trading in stocks which is announced in the WhatsApp Group. Next Day they send notifications for sell. And They soughting that they made Profit. So Greedy fellow will invest more and more. And In last money got stuck in the Institutional Account. When we make Withdrawal Request, they says that You need to pay taxes or fees like 10%,20% then you are able to make Withdrawal. I think It is completely a Scam & Bloody Fraudster which I met ever in my life. I have lost more than 3 Lacs and Some other lost their 30Lacs,40Lacs and So on. So Please do it carefully when It comes from Social Madia. Thanks
kalemohan
3 months ago
I am facing wrong deductions against amc charge by associate of my banker canarav bank deccan gymkhana pune branch for non holding atm card.I lodged complaint but bank is not taking corrective action nor refunding debited charges to my SB Acct.with bank also not answering my phone calls.this happened in last year in approx. july/aug 2023.what is to be done?
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