Fraudsters on the prowl from Hong Kong, Cambodia: Sebi warns depositories, exchanges warn investors

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If the stock market booms, can fraudsters be far behind? In order to tackle financial frauds in a climate of bubbling investor enthusiasm, capital market regulator Sebi has instructed depository participants to take swift action and report any impersonification, usage of identity, trademark or logo to the National Cybercrime Reporting portal.

The Sebi action seems to be triggered by a report from the Indian Cyber Crime Coordination Centre, that has deciphered a new pattern of cross-border cyber-enabled financial fraud and investment scam, with the fraudsters masquerading as stockbrokers and executives of capital investment firms.

“Fraud WhatsApp groups are learnt to be operating from Cambodia/Hong Kong. At the early stage, these apps were learnt to be circulated through Google Playstore, Apple App store and via web links that are sponsored mainly through Instagram and Facebook Advertisements targeting users with ‘interest in stock markets,” read the report.

To gain credulity, these fraudsters are writing the messages in such formats that a potential prey doesn’t doubt their veracity.

On May 15, Sebi shot off a letter informing depositories about the receipt of the report on abuse of ‘SMS Headers’.

The report further said that there is a rise in the new pattern of swindling which is mostly taking place by sending fake mobile apps, websites, and WhatsApp Telegram.

In February this year, Sebi issued an advisory against fraudulent trading schemes. According to the market regulator, these pretended that they came from foreign portfolio investors (FPIs) and were addressed to domestic investors.

Acting in tandem the exchanges, on May 29, cautioned investors to not trust social media posts that promise high returns through specialised apps using the names of prominent brokers and other intermediaries.

In its statement, NSE named Choice Broking and R K Global Shares & Securities and added they have learnt about fraudsters impersonating of these entities. BSE stopped short of naming any particular company.

“It has been brought to the notice of (NSE) that persons named “Makhan Prajapati” and “Rakesh Sharma” claiming to be associated with entity named “Choice Broking” operating through mobile number “9977690997” and person named “Kuldeep Valiya” claiming to be associated with entity named “RK Global Shares & Securities” and operating through mobile number 9112569388″ are providing securities market tips for trading and assured returns on investment in the stock market. He is also offering to handle investors’ trading accounts by asking them to share their login ID/passwords. Investors are requested to take note that Choice Equity Broking and RK Global Shares & Securities, registered trading members of (NSE), have informed that the above-mentioned person is not associated with them in any manner,” NSE said in its statement.

Once an investor fails to doubt the dubiousness of fraudulent messages, they download the app and begin investing through it.

BSE wrote in its statement, “Generally, impersonators carry out their activities via social media platforms and messaging apps such as Facebook pages and WhatsApp groups. They make enticing promises of guaranteed high returns. Reality is that their investments never actually occur on the stock exchanges. Instead, these transactions remain as paper trades within the app. When investors try to withdraw substantial amounts, the app suddenly becomes non-functional.”