These Transactions Never Actually Occur On Stock Exchanges, They Remain As Paper Trades Within App: SEBI On WhatsApp Investment Scams

Investors think they are engaging with genuine registered intermediaries, they download the app and make investments through it. Unfortunately, those transactions never take place on the Stock Exchanges.

People are losing large sum of money after WhatsApp scams make them invest money on some third-party apps. SEBI has finally warned retail investors about it.

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In a recent incident, a 58-year-old man from Kolkata fell victim to an investment scam on WhatsApp, losing Rs 20 lakh. Initially drawn in by a Facebook advertisement for a free online stock trading course, the victim was later added to a WhatsApp group by the course organisers. After a period of building trust, he was persuaded to invest through a specific trading platform called Zoksa. Under pressure, he invested his money, only to find out that the platform was fraudulent.

In a similar case, the Cyber Cell of Delhi Police launched an investigation into an online investment scam after a 34-year-old woman reported losing Rs 25 lakh. The woman had been seeking investment opportunities and was directed by an investment agent to trade on a third-party app. Initially, her investments seemed profitable, generating daily returns. However, once she had accumulated a significant profit, the fraudsters abruptly froze her funds, leaving her unable to access her money.

The complainant said, “There were layered levels of returns on the app, the higher the amount, the higher the profits. I was then further encouraged to invest in higher amounts, with assurances that the investing app was legally registered with SEBI and in collaboration with two other companies.” SEBI, or the Stock Exchange Board of India, has issued a cautionary notice to retail investors regarding such deceptive schemes. In a communication addressed to investors, SEBI highlighted the tactics used by fraudsters who falsely claim to be SEBI-registered entities, luring individuals with promises of assured high profits.

When investors perceive that they are engaging with genuine registered intermediaries, they proceed to download the app and make investments through it. Unfortunately, the truth is that their investments do not actually take place on the Stock Exchanges. Instead, these transactions are confined to virtual or paper trades within the app, leading to significant financial risks and potential losses for the investors.

SEBI's Warning Letter To Retail Investors

Dear Investor,

SEBI has been receiving complaints from investors/intermediaries about fraudulent trading activities in the name of prominent SEBI registered financial institutions.

Generally, impersonators carry out their activities via social media platforms and messaging apps, such as Facebook pages and WhatsApp groups. They make enticing promises of guaranteed high returns. Investors, believing they are dealing with legitimate registered intermediaries, download the app and invest through it. However, the reality is that their investments never actually occur on the Stock Exchanges. Instead, these transactions remain as paper trades within the app. When investors try to withdraw substantial amounts, the app suddenly becomes non-functional.

Investors are advised to stay away from fraudulent trading schemes/Apps promising unrealistic returns through block deals and IPO allotments. You may refer the following link of BSE website to verify the details of registered trading members of BSE, where you can find their official website links and details about the Apps.