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SEBI's Warning: Unregistered HYIPs/Apps Use Paper Trades to Dupe Investors
In a recent incident, a 58-year-old Kolkata resident lost Rs 2000,000 to an investment scam on WhatsApp. The victim was initially lured by an advertisement on Facebook offering a free online stock trading course and was subsequently added to a WhatsApp group by the organizer. He was then directed to a specific trading platform called Zoksa. Under pressure, he invested funds on this platform, only to realize it was a scam.
In another similar incident, the Delhi Police Cyber Cell began investigating an online investment scam after a 34-year-old woman claimed to have lost Rs 2500,000. The victim claimed that she was looking for an investment opportunity and an investment agent redirected her to a third-party application to trade. Initially, the investment seemed promising, with daily returns yielded. However, once significant profits were accumulated, the scammers suddenly froze her funds.
“There were layered levels of returns on the app, higher the amount, 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,” said the complainant.
The Securities and Exchange Board of India (SEBI) has issued a warning to retail investors about such scams. In a letter to investors, SEBI said scammers claiming to be registered with SEBI lure them with guaranteed high returns. Believing that they are dealing with legitimately registered intermediaries, investors download apps and invest. However, the reality is that their trades never be conducted on the stock exchanges; instead, the transactions remain as paper trades in the apps. (paper trades are simulated trading that allows investors to practice buying and selling securities without real money.)
SEBI advises investors to stay away from fraudulent trading schemes/Apps promising unrealistic returns through block deals and IPO allotments.
(Source: The Times of India)
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