Stock market fraud via WhatsApp, Facebook, Telegram: Two investors lost over Rs 3 crore; how to identify scam and protect yourself

Two incidents were reported in a week of individual investors allegedly losing over Rs 3 crore in two different stock market frauds. Such scams are on the rise and common people end up losing their savings to them. How can you identify when a fraudster is trying to dupe you? Is there a way to protect yourself and your savings from these scams? If you want to save yourself from the scams, you must understand the modus operandi of such stock market frauds. Read on to find out more.

An 88-year-old CA lost Rs 1.97 crore in a stock market scam: How was he duped?

An 88-year-old retired chartered accountant from Vasana, Ahmedabad, reportedly lost Rs 1.97 crore in an alleged stock trading cyber fraud, according to the police. In an FIR filed with the Ahmedabad cybercrime branch, Madhukant Patel explained how the scam unfolded: It started in the first week of February when he received a message on WhatsApp from an unknown number. The sender identified himself as Sunil Singhania, and claimed to be working with a stock market expert named Karanveer Dhillon.

Singhania invited him to be a part of a WhatsApp group named “Stock Vanguard 150” where Singhania and Dhillon started sharing various stock market investment tips and tricks. There were several other participants in the group. Then, the Vasana resident was added to another WhatsApp group named “Stock Vanguard (XM-5)”, stated the FIR. Singhania and Dhillon used to conduct video conferences on WhatsApp to share investment advice. Within a month, some members of the group began posting about the profits they had made in the stock market based on the tips shared by Singhania and Dhillon. Trusting those claims to be genuine, Patel started investing his money in the stock market. The fraudsters asked him to log in to a website they operated – “app.alicexa.com”.

The website looked genuine as it showed updates on various stocks, the prices, details of stock purchases, sales and transactions. The senior citizen began trading small amounts based on the tips received on the WhatsApp group and booked huge profits. This gave Patel confidence to invest Rs 1.97 crore in various stocks between March 12 and May 3, 2024, based on the buying and selling tips provided by Singhania. Patel became suspicious when Singhania told him that he could obtain shares even after the closure of an IPO and buy shares on the website even if the prices have hit the upper circuit. The octogenarian received an allotment of some IPOs on the listing date and sold them. Time and again, Singhania assured him that his money was safe. When the CA wanted to withdraw Rs 1.5 crore, the fraudster informed him that he had to pay 15% tax to get his money. Thinking it to be a legitimate procedure, Patel paid Rs 18,70,000 to Singhania. However, the scamster again demanded a payment of 1% of the total portfolio value, which was around Rs 5 crore on the fraudulent trading website. Realising he had been scammed, Patel went to the Ahmedabad cybercrime branch and lodged an FIR against an “unknown person” under various sections of the IPC.

Share market fraud: Another person lost Rs 1.13 crore

In another share market fraud, a deputy mamlatdar from Vastral, Ahmedabad, allegedly lost Rs 1.13 crore. In a complaint with the Gandhinagar cybercrime branch, Jayendra Chauhan, deputy mamlatdar, alleged that his ordeal began on April 3 while he was browsing Facebook for share market tips. He stumbled upon an entity called Vanguard Club V5, featuring a famous investment analyst. He then joined the club’s app. The moment he logged in to the app, he got a link to F&FTPL from a mobile number asking him to share his Aadhaar card details and deposit Rs 25,000 to open an account. Based on the tips shared through the app by one “Professor Ganesh Ranga”, Chauhan started trading through the app and booked gains. Encouraged by the initial profits, he further invested Rs 1.13 crore between April 4 and April 29, 2024. His dream of minting money from the stock market became a nightmare when he received a message claiming that Ranga had been arrested in a money laundering case on April 30, 2024. Members of the group were asked to deposit 30% of their balance as a refundable deposit to help Ranga. Members could withdraw the balance only after they made the deposit. Unable to access his money, Chauhan approached the police, TNN reported.

Stock market frauds on the rise: How scamsters dupe people; know modus operandi of ‘pig-butchering’ scam

Chauhan and Patel are two of the thousands of people who fell victim to a series of frauds, usually perpetrated through various social media platforms like Facebook, Instagram, WhatsApp and Telegram. These scams are often dubbed as “pig-butchering” scams where fraudsters lure potential targets with promises of hefty returns but end up taking their money. The scammers resort to various tactics, ranging from creating fake websites, developing fake stock investment apps to creating dubious WhatsApp groups where various members rejoice how good the scheme is. Often fraudsters make fake ads claiming to be associated with a reputable market analyst or pose as representatives of reputable firms. First, they try to gain the trust of their targets through various strategies — offering free stock recommendations, sharing screenshots of stock movements, giving access to foolproof trading websites, sharing messages or success stories of customers who have already pocketed high returns because of them. Using personal anecdotes and promises of high returns, fraudsters usually manipulate individuals into investing substantial amounts.

How to identify and protect yourself from stock market scams

How can you identify these frauds if somebody approaches you tomorrow? ET Wealth Online spoke to various experts to find out. Read on:

1) Too good to be true: Promise of unrealistic high return
The first thing that should ring a bell in your mind is unrealistically high returns from the stock market — for instance double or triple your money within a few weeks. Vikas Gupta, CEO and Chief Investment Strategist, OmniScience Capital, says, “The most fundamental way to protect oneself from fraud is to keep greed out of one’s mind. If one believes that the stock market is a place to gamble and expect to double or triple their money within a day or a few weeks, no regulations or regulators can save them. It’s crucial to understand that the stock market’s growth reflects fundamental GDP growth, driven by the business growth of listed companies, typically yielding 12%-15% returns over three to five years or more. A small number of people might achieve 25%-30% returns over the long term, but anything beyond this is unsustainable. If someone promises or guarantees such high returns, one should be extremely suspicious of their intentions.”

2) Always ask for a valid SEBI/RBI licence before taking any investment tips
To identify if someone is trying to dupe you, be wary of unsolicited contacts, such as unexpected calls, emails or messages from unknown sources. “If you are entering into a WhatsApp group, check who is the admin. If it is related to finance, ask for their registration number and authenticate it from SEBI or related licensing platforms,” says Gaurav Jalan, Founder & CEO of mPokket. Try and restrict your interactions with verified WhatsApp accounts or verified Truecaller accounts.

Abhishek Kumar, a SEBI-registered investment advisor and Founder of SahajMoney.com, says, “The way to protect yourself from these frauds is to not believe everything they say. Ask for proof so that you can independently verify the claim. Also, never deal with unregistered entities; and before handing over your money verify, their credentials on SEBI’s website.”

3) Investing through a new app or website? Check if it is real and fake
While investing through any app, check how legitimate it is. Jalan says, “If it is a stock investing app look for a SEBI licence; and if it is an NBFC, then an RBI licence.”

He suggests that people refrain from downloading APK apps that are not listed on the Google Play Store or Apple Store and be wary of unsolicited messages or calls claiming to offer prizes, lottery, loans, or investments with high returns.

4) Never share passwords or OTP with anyone
As a precautionary measure, change your passwords frequently. Opt for two-factor authentication. Never share your personal financial information, passwords or login credentials with anyone, even if they claim to be from a reputable firm, company or bank, Jalan adds. Do not use common credentials for investments. If the common credentials are shared through a group, it is likely to be a scam.