Sebi alerts investors to fraudulent WhatsApp stock tip rackets

The Securities and Exchange Board of India (Sebi) has cautioned market participants against fraudulent stock-tipping schemes being operated through private WhatsApp groups, cautioning that such operations lack regulatory oversight and expose investors to significant financial risk.

The regulator noted that these schemes typically operate through invitation-only messaging groups where unregistered entities offer stock recommendations and investment advice. The operators use international phone numbers to mask their location and identity, creating a veneer of legitimacy that makes it difficult for authorities to trace them.

A hallmark of these scams is the circulation of fabricated profit testimonials purportedly from existing members, designed to build confidence among prospective investors. These fake success stories are used as social proof to encourage newcomers to subscribe to paid services or follow costly investment recommendations.

Sebi emphasized that only registered investment advisers authorized by the regulator are permitted to offer stock tips or investment counsel to the public. The regulator urged investors to verify the credentials of any entity offering financial advice and to report suspected fraudulent activity to the appropriate authorities. Retail investors are advised to exercise caution when approached through unsolicited channels and to cross-check claims with official regulatory databases before committing funds.