SEBI Issues Caution Against Fraudulent/Manipulative Investment Activities on Social Media Platforms

The Securities and Exchange Board of India (SEBI) has issued a warning about a surge in fraud related to the securities market across various social media platforms, including YouTube, Facebook, Instagram, X (formerly Twitter), WhatsApp, Telegram, Google Play Store, and Apple Store, etc.

Exploiting social media, scammers are luring unsuspecting investors by giving fraudulent trading calls under the guise of providing education. These schemes often feature misleading or deceptive testimonials, false promises, or guarantees of assured or risk-free returns.

The SEBI outlined the following common types of fraud related to the securities market through social media platforms:

• Unregistered Investment Advisory Services: Fraudulent entities falsely claim to be SEBI-registered intermediaries or display fake certificates purportedly issued by SEBI.
• Impersonation of SEBI-Registered Entities: Fake trading platforms, WhatsApp and Telegram channels falsely associate themselves with legitimate SEBI-registered entities, promising guaranteed or risk-free returns.
• Misleading/Manipulative Investment Groups: Scammers lure investors into private chat groups on WhatsApp and Telegram, such as “VIP Group,” “Discounted Trading Group”, “Institutional Trading Group,” “Official Stock Community,” and “Investment Club”, via fraudulent ads/posts containing misleading or manipulative contents.
• Fraudulent Trading/Advisory Apps: Scammers claim to offer exclusive trading services on their trading/advisory apps, promising preferential services with regard to trade and share price, including institutional trading accounts, IPOs at discounted prices, block trade at discounted prices, and sure-shot allocation of IPO.

The SEBI urges investors to exercise caution and verify the authenticity of social media handles claiming to represent SEBI-registered intermediaries. SEBI advises against engaging in investment or trading activities through unregistered intermediaries/web applications/platforms/apps.

Additionally, SEBI has mandated all regulated intermediaries to use the ‘1600’ phone number series exclusively for service and transactional voice calls to existing customers. Investors should recognize this number series to mitigate the risk of fraud from entities using regular 10-digit numbers.