SEBI issues warning to retail investors: Beware of investment scams on messaging apps

The Securities and Exchange Board of India (SEBI) has issued a stern warning to retail investors regarding investment scams proliferating on messaging apps like WhatsApp and Facebook. Recent incidents involving substantial financial losses have highlighted the dangers posed by fraudulent third-party trading platforms.

In a notable case, a 58-year-old resident of Kolkata fell victim to an investment scam on WhatsApp, resulting in a loss of Rs 20 lakh. The victim initially responded to a Facebook advertisement offering a free online stock trading course. Subsequently, he was added to a WhatsApp group by the organizers, where he was coerced into investing through a specific trading platform named Zoksa. However, upon investing, he realized that the platform was fraudulent, and his funds were irrecoverably lost.

Similarly, the Cyber Cell of Delhi Police launched an investigation into an online investment scam after a 34-year-old woman reported a loss of Rs 25 lakh. The victim, seeking investment opportunities, was directed to trade on a third-party app by an investment agent. Despite initially promising returns, the app abruptly froze her funds once a substantial profit was amassed, leaving her with significant financial losses.

The modus operandi of these scams typically involves luring investors with the promise of guaranteed high returns. Fraudsters, claiming to be registered with SEBI, entice unsuspecting individuals to download their apps and invest through them. However, in reality, these investments never materialize on the stock exchanges; instead, they remain as paper trades within the fraudulent app.

SEBI has urged investors to exercise caution and conduct thorough due diligence before investing through any platform. The regulatory body emphasized the importance of verifying the credentials of investment intermediaries and cautioned against falling for unrealistic promises of high returns. With the proliferation of digital investment avenues, SEBI continues to emphasize the need for vigilance and awareness among retail investors to safeguard against fraudulent schemes.