Sebi warns investors against astroturfing, fake stock tips, profit claims in WhatsApp groups

New Delhi: Markets regulator Securities and Exchange Board of India (Sebi) has cautioned investors against fraudulent WhatsApp groups that use fake endorsements and profit claims to create a false impression of credibility and lure people into acting on stock recommendations.

In a statement on Thursday, Sebi said certain unregistered individuals were offering stock tips through invitation-only WhatsApp groups under the guise of free investor education. The operators often use overseas phone numbers while posing as stock market experts.

To make their recommendations appear credible, some members allegedly work with the operators by posting false profit claims and praising the supposed experts. This practice, known as ‘astroturfing’, creates an illusion of genuine public support and induces unsuspecting investors to follow the recommendations, the regulator said.

Sebi also flagged a tactic used by such groups after regulatory authorities or enforcement agencies take action against them. Members are contacted from new numbers and invited to join replacement groups, with operators claiming that the earlier groups were banned due to restrictions imposed by social media platforms.

One message cited by Sebi claimed that the previous group had been banned due to a platform’s risk-control measures and invited members to join a new group offering daily stock recommendations and trading guidance.

Advising investors to exercise caution, Sebi urged them not to join invitation-only WhatsApp groups run by unknown individuals or those claiming to be market experts, particularly if they use overseas numbers.

Investors were also warned against relying on messages featuring praise, profit claims or trade confirmations posted by other members, as these could be deliberately planted to mislead them.

Messages claiming that a group has been suspended, closed or banned, followed by invitations to join a new group, should be treated as red flags, Sebi said.

The regulator further advised investors not to open accounts on, or transfer money to, trading platforms or applications recommended by such groups. They should also avoid sharing details of their investment holdings or trading accounts with the operators.

“Deal only with Sebi-registered intermediaries and use only authentic trading apps,” the regulator said, urging investors to verify the registration status of intermediaries through its official website.

Sebi said the advisory was intended to prevent investors from acting on stock tips and trading calls circulated through fraudulent, closed WhatsApp groups and urged them to remain vigilant in the securities market.