Kolkata: Stock tips circulating on WhatsApp groups are dangerous to follow, capital markets regulator Sebi has told investors. In a statement, Sebi has stated
that unregistered persons were offering stock recommendations to investors through WhatsApp groups in the name of free investor education. These groups are based on invitation. The operators of these fraudulent groups often pose as market experts. “To make these calls look credible, certain members, acting in concert with the operators, post false claims of profit and praise the ‘expert’. This practice, known as astroturfing, creates a false impression of genuine support and induces unsuspecting investors to act on the call,” Sebi said.
New tactic used by WhatsApp groups
Sebi has warned investors by flagging a tactic used by such fraudulent groups after enforcement agencies or regulatory bodies take action against them. The operators of these fraudulent groups contact members of the old group or new targets from a new number and invite them to join another group. The operators tell the gullible public that the previous group has been banned due to social media platform restrictions. “Due to social media platform’s risk control measures, our previous group has been banned. This new group will provide daily recommendations of quality stock information and trading guidance. Please join the group,” reads a typical message circulated by one such group.
Sebi lays down the Don’ts
The market regulator has clearly said that investors or aspiring investors should not join invitation-only WhatsApp groups which are operated by unknown persons. It has said that they should be especially careful about those using overseas numbers. “Deal only with Sebi-registered intermediaries and use only authentic trading apps,” the regulator has said. Investors can easily verify the registration status of intermediaries through Sebi’s website.
Investors must not open accounts on, or transfer money to, trading platforms or applications recommended by such groups. None should share his/her investment holdings or trading account details with these operators, Sebi said.
The regulator has also urged investors not to be influenced by messages containing profit claims or trade confirmations posted by other members since these are usually planted by frauds to create a misleading impression.
