SEBI warns investors of stock-tip fraud schemes on WhatsApp

The Securities and Exchange Board of India has issued a fresh warning to retail investors about fraudulent stock-tipping schemes proliferating on WhatsApp and similar messaging platforms. These illegal operations typically operate by offering purported stock recommendations and market tips to subscribers, promising substantial returns and positioning themselves as expert analysts.

SEBI said operators of these schemes employ a coordinated strategy known as astroturfing to make their recommendations appear legitimate. Certain members working in concert with the operators post fabricated claims of profits and praise the supposed expertise of the tipster, creating an artificial impression of genuine support among group members. This manufactured consensus is designed to pressure unsuspecting investors into acting on the recommendations without proper due diligence.

The regulator cautioned that investors should be wary of unsolicited investment advice circulating on messaging apps and social media platforms. Such groups typically lack proper regulatory authorization and operate outside SEBI's oversight mechanisms. Investors are advised to verify the credentials of any person or entity offering investment advice and to cross-check claims of past performance through official SEBI-registered intermediaries.

SEBI reiterated that stock-tipping by unauthorized persons is illegal under securities laws. Investors who fall victim to such schemes are encouraged to report the matter to SEBI's complaints portal or file a complaint with local law enforcement authorities. The regulator emphasized that there are no shortcuts to wealth creation in financial markets and that legitimate investment decisions should be based on thorough research and advice from authorized professionals only.