The Securities and Exchange Board of India (Sebi), in a circular dated April 11, 2025, warned investors about rising fraud and manipulation linked to the securities market on social media platforms.
Investors must stay vigilant to avoid being misled.
Impersonation trick
Fraudsters often pose as Sebi-registered intermediaries.
“They create fake but sophisticated websites or apps, with professional-looking interfaces, which resemble legitimate ones.
"They use similar names, logos, and registration numbers.
"They sometimes even forge Sebi-like certificates and falsely claim Sebi registration.
"They also create fake social media profiles of real intermediaries,” says Dip Mehta, partner, EY Forensic and Integrity Services.
These scammers share false testimonials.
“They initially show small profits to build trust,” says Mehta.
Another trick is the promise of exclusive access.
“The purpose is to lure people into ‘VIP’ trading clubs on Telegram and WhatsApp,” says Ajay Lakhotia, founder and chief executive officer, StockGro.
Anyone claiming to be a Sebi-registered investment advisor or research analyst must provide a valid registration number.
“Ask the advisor for their Sebi registration number, then verify it by conducting a search on Sebi’s website,” says Shravan Koti, chief information security officer, Zerodha.
Fake trading and advisory apps
Fraudsters repurpose dormant apps originally created for unrelated purposes.
“Since the app has already been live for a few years and has thousands of downloads, it bypasses the usual scrutiny that new apps face,” says Koti.
Verify the developer’s name. If the app claims to be from, say, a well-known broker, but the developer listed is some other entity, that is a red flag.
Stock advisory groups
Unverified investment groups on WhatsApp, Telegram, and social media often spread unreliable tips.
“Unless the group is officially verified, treat their investment tips with scepticism,” says Koti.
Check if the app is listed by a Sebi-recognised exchange or registered broker.
“Verify broker details on Sebi’s website. Read app reviews and search for scam alerts online.
"Avoid apps that ask for direct fund transfers outside of Sebi-recognised brokers or clearing corporations,” says Mehta.
Koti recommends enabling privacy settings on messaging apps to block additions to unknown groups.
Beware of fake certificates
Fake documents usually have poor design and errors.
“They are often characterised by low resolution, grammatical errors, typographical mistakes, and an overall unprofessional appearance.
"Compare the logos and branding on the certificate or promotion with those on Sebi’s website,” says Mehta.
Red flags to watch out for
Promises of unrealistically high returns within a short period are a strong warning sign.
“In particular, be sceptical of promises of guaranteed returns,” says Prashant Mali, cyber law expert and advocate, Bombay high court.
Anyone making them is likely to be unregistered and in violation of Sebi’s code of conduct.
Mali cautions against tips accompanied by high-pressure tactics to act fast on them.
Mehta warns against claims of insider information.
“If specific stocks are being pushed, they could be part of a pump-and-dump scheme. Be wary also of high upfront fees,” he says.
“Watch out for the use of generic mobile numbers rather than the official ‘1600’ series designated by Sebi for registered entities,” says Amit Tungare, managing partner, Asahi Legal.
Report on the Market Intelligence portal.
“By actively using this portal, investors can contribute to Sebi’s surveillance efforts,” says Tungare.
STEPS TO TAKE AFTER A CYBER FRAUD
- Report the fraud at https://cybercrime.gov.in or your local police station with all details, including communication and payment records
- Lodge a complaint with Sebi via the SCORES portal (https://scores.gov.in) and submit supporting documents
- Inform NSE or BSE to help identify and warn against unregistered entities
- Report suspicious phone numbers to Sanchar Sathi portal or app
- Notify your bank or UPI app immediately to block the transaction
- Call 1930 to freeze the recipient’s account
© 2025