SEBI cautions public against fraudulent activities on social media platforms

New Delhi: Markets regulator SEBI on Friday cautioned the public against manipulative activities related to the securities market on social media platforms (SMPs) in the wake of a growing number of frauds emerging on these platforms.

The regulator also stressed the importance of dealing only with SEBI-registered intermediaries and using authentic trading apps while investing.

This advisory comes after SEBI observed a sharp rise in fraudulent activities across several popular platforms including YouTube, Facebook, Instagram, X (formerly Twitter), WhatsApp, Telegram, Google Play Store, Apple Store, and others.

In its statement, SEBI noted that scamsters have been using these platforms to lure investors under the guise of offering educational content, while in reality providing misleading trading calls, deceptive testimonials, and making false promises of guaranteed or risk-free returns.

A common pattern among these scams includes unregistered investment advisory services, where fraudsters falsely claim to be registered with SEBI or display fake registration certificates. Some even impersonate SEBI-registered entities through fraudulent trading platforms, or WhatsApp and Telegram channels, falsely suggesting affiliations with genuine registered intermediaries while promising high or assured returns.

Also, SEBI highlighted the use of manipulative content designed to entice investors into joining private chat groups or channels, often branded as VIP groups, institutional trading groups, or investment clubs. These are typically promoted through misleading advertisements or social media posts to gain the trust of unsuspecting investors.

Another rising threat comes from scamsters promoting fake advisory or trading apps that claim to offer exclusive services such as preferential trading access, discounted IPOs, block trades at reduced prices, or sure-shot IPO allocations. These fraudulent platforms often mislead investors into believing they are receiving special institutional benefits.

In view of these, the regulator advised investors "to exercise caution and due diligence to verify the genuineness of social media handles of SEBI registered entities while accessing them. Further, while investing in the securities market, investors are advised to deal with only SEBI-registered intermediaries and authentic trading apps".

Further strengthening its efforts to protect investors from fraud, SEBI has directed all its regulated and registered entities to use only the '1600' phone number series for making service and transactional voice calls to existing customers. This move is aimed at reducing frauds carried out via regular 10-digit numbers, which are often used by scamsters to impersonate legitimate entities.

By standardising the communication through the '1600' series, SEBI aims to make it easier for investors to identify legitimate calls from regulated entities, thereby minimising the chances of falling prey to financial scams.

SEBI reiterated that investors should avoid engaging with unregistered intermediaries, web platforms, or applications.

It also clarified that in the event of any disputes arising from dealings with such unauthorised entities, investors will not be eligible for any recourse under SEBI's jurisdiction. This includes protection under Sebi or exchange regulations, the SCORES investor grievance redressal mechanism, or the online dispute resolution platform administered by exchanges and depositories.

To aid in curbing such activities, the regulator encouraged investors to report details of any unregistered entities or platforms offering securities-related advisory services through SEBI's Market Intelligence (MI) portal.