Sebi warns investors against WhatsApp stock tips. Here's how you can avoid such traps

Market regulator Sebi has warned investors against joining invitation-only WhatsApp groups offering stock tips and trading recommendations, saying fraudsters pose as market experts and use fake profit claims to lure unsuspecting investors.

In a cautionary statement, the Sebi said several unregistered individuals were operating closed WhatsApp groups, mostly through overseas mobile numbers, and circulating unauthorised buy and sell calls under the pretext of providing free investor education.

The regulator said these groups often use members working with the operators to post misleading messages about profits earned from stock recommendations. Such members also praise the supposed market expert to create an impression that the trading calls are reliable.


Sebi identified this practice as astroturfing, in which coordinated or fabricated messages are used to create the appearance of genuine public support.

The messages are designed to build trust among investors and encourage them to act on stock recommendations without verifying the credentials of those providing them.

The regulator also highlighted how operators continue their activities even after enforcement agencies or regulatory bodies take action against fraudulent groups.

When a WhatsApp group is suspended or banned, its members may receive fresh invitations from a different mobile number asking them to join another group.

One such message cited by Sebi tells investors that the previous group was banned because of the social media platform's risk-control measures and promises daily stock recommendations and trading guidance through a replacement group.

Sebi said investors should treat such invitations as warning signs and leave these groups rather than follow operators to new ones.

The regulator advised investors to avoid invitation-only WhatsApp groups run by unknown individuals or people claiming to be stock market experts, particularly when the groups are operated through overseas numbers.

It also cautioned investors against relying on messages posted by other group members claiming to have earned profits or successfully executed trades based on the recommendations.

According to Sebi, these testimonials and trade confirmations could be planted by individuals working with the operators. The regulator further warned investors against opening accounts on trading platforms or downloading applications recommended through such groups.

Sebi reiterated that investors should deal only with registered market intermediaries and use authentic trading applications. The regulator urged investors to remain vigilant and avoid acting on stock recommendations circulated through such groups without independently verifying the identity and registration status of those offering the advice.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.