SMS-Based Investment Scams: Sebi Seeks Help From Telecom Operators, Banks

Concerned over a spurt in investment scams perpetrated through SMSes, WhatsApp and social media, Sebi has beefed up its surveillance on such platforms and is seeking greater cooperation from the mobile and Internet service providers, as well as banks, to nail the culprits.

The market trading activities have seen a major upsurge in recent months, but this positive environment is also leading to many fundamentally weak stocks generating interest.

The Securities and Exchange Board of India (Sebi) has enhanced surveillance on such securities so as to ensure that no unscrupulous players take genuine investors for a ride.

The modus operandi revealed by this enhanced vigil typically includes tax evasion through bogus gains or losses through stock market platform; trading on the basis of Unpublished Price Sensitive Information; and certain Indian and overseas entities engaging in fraudulent activities of manipulating GDR route.

This vigil has also unearthed a large number of cases where unregistered entities are indulging in fraudulent act of luring investors to securities market through false and unrealistic SMS claims, a senior official said.

To check this menace, Sebi has enhanced its surveillance to catch such scamsters and the number of requests to the mobile operators, internet service providers and banks have gone up significantly in the recent months.

While most of the requests are being adhered to on time, some telecom operators have been found to be lax in replying to the information requests from Sebi, the official said.

The matter would be taken up with the Telecom Ministry if the requests remain pending despite further reminders, he said while adding that banks have been relatively more cooperative.

Typically, the gullible investors are first lured by these scamsters through SMSes, WhatsApp messages and posts on social media platforms like Facebook and Twitter, after which they are given certain bank account numbers to deposit money.

The mobile numbers and URLs, as also the bank account numbers, become the mainstay for the investigation by Sebi, ownership details of which help the regulator reach the perpetrators of such manipulative activities.

Besides tightening its noose on the scamsters, Sebi has also enhanced its investor awareness campaign on these issues.

In a latest public notice, the capital markets regulator has cautioned the investors against trading on the basis of unsolicited tips received through SMSes, social media, websites and other public media platforms.

It also asked the public to deal with only Sebi-registered investment advisers and research analysts and warned the unregistered entities of strict action.

Sebi has already taken action against seven such entities for providing investment advice without registration.

Leading bourse BSE also said that "investors are cautioned against SMS tips to buy certain scrips suggesting increase in their market price".

"Do not blindly follow these tips and do thorough analysis about the company before investing," it added.

Cautioning the investors, NSE also said, "Do not trade on the basis of SMS tips".