Scamsters' trading tips via SMSes: Sebi seeks RBI, TRAI help

Seeking to capitalise on the stock market rally, fraudsters are flooding gullible investors with unsolicited offers promising huge gains, prompting regulator Sebi to consider a closer coordination with banking and telecom regulators to check this menace.

These offers are mostly being made through SMSes, WhatsApp and various social media platforms, wherein names of some established brokerage houses and exchanges are also being misused.

While the Securities and Exchange Board of India (Sebi) has already taken action in several such cases so far, it is investigating a number of others involving similar activities, a senior official said.

To check the menace, the regulator is also looking at a closer coordination with its peers from the banking and telecom sectors -- namely the Reserve Bank of India (RBI) and the Telecom Regulatory Authority of India (TRAI), they added.

Typically, Sebi depends on the call data records from the telecom companies and the financial transaction statements from the banks in its probe against such cases of frauds, where investors are lured into depositing money into designated bank accounts with promise of huge returns.

Generally, 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.

Sebi has already taken action against several entities for providing investment advice without registration. These included MCX Biz Solutions, Moneyworld Research and Advisory, Global Mount Money Research and Advisory, Orange Rich Financials, GoCapital, CapitalVia Global Research and one Imtiyaz Hanif Khanda and his maternal uncle Vali Mamad Habib Ghaniwala.

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

In several latest public notices, the capital markets regulator 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.

Last year, Sebi had floated a consultation paper to ban unauthorised trading tips through SMSes, WhatsApp, Twitter, Facebook and other social media platforms, as also games, competitions and leagues relating to securities market.

It also proposed to curb unsolicited investment advice and promotion of investment products through electronic and broadcasting media platforms and has sought greater checks and balances for online investment advisory services and use of automation or robotic tools.

However, the regulator has yet to put in place a final regulation in this regard.