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The Securities and Exchange Board of India (Sebi) has issued an urgent warning to investors about the increasing number of fraudulent activities in the securities market, particularly via social media platforms. Sebi has advised investors to engage only with intermediaries registered with it and to use authentic trading applications.
"Investors are advised to deal with only Sebi registered intermediaries and through authentic trading apps," the market regulator stated on Wednesday. To ensure the validity of their transactions, investors should verify the registration status of entities using its official resources and conduct transactions solely via approved platforms.
The regulator further alerts investors to communicate with genuine social media handles of Sebi registered entities. This measure is part of a broader effort to caution against rampant frauds executed by unscrupulous entities.
The rise and widespread adoption of social media have changed how information is shared, but it also presents risks. Sebi noted, "The rise and adoption of social media have redefined the way we connect and share information. However, some entities are using Social Media Platforms to entice and deceive gullible investors." This trend poses significant challenges, as fraudulent entities often exploit these platforms to gain investors' trust.
One common tactic involves sending unsolicited invitations to join WhatsApp groups under the guise of offering free trading courses or VIP memberships. Such entities create fake profiles that mimic experts or legitimate Sebi intermediaries and use fake testimonials to lure investors. "Such entities usually send unsolicited invitations in the form of links to join WhatsApp Groups," the regulator warned.
In these scams, investors are tricked into transferring funds with false promises of high returns. The use of fake testimonials and profiles portraying well-known public figures adds an additional layer of deceit. Sebi advises investors to avoid trusting unsolicited messages and to refrain from joining dubious groups or communities.
This advisory underscores the importance of conducting thorough due diligence before engaging in financial transactions. Sebi's emphasis on using verified sources and platforms aims to shield investors from financial losses and fraudulent activities.
As the digital landscape continues to evolve, investors must remain cautious and informed. By adhering to Sebi's guidelines and recommendations, investors can better protect themselves from the pitfalls of fraudulent schemes.
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