Mumbai Senior Loses Rs 2 Crore in WhatsApp Stock Market Scam

 Navigating Stock Market Scams: Protecting Your Investments in India

Recently, a 71-year-old retired financial professional from Mumbai lost around Rs 2 crore in a stock market scam executed via WhatsApp, according to a report by the Indian Express on June 19. The scammer, a woman, contacted the senior citizen over WhatsApp, promising lucrative investment opportunities in the equity market. To make the scheme appear genuine, she provided a fake mobile app mimicking a popular investment firm’s platform. Additionally, she created a WhatsApp group with several accomplices who regularly boasted about their alleged returns from stock trading based on the ‘tipster’s’ advice. Over a month, this facade convinced the victim to transfer nearly Rs 2 crore across 24 transactions. When the victim attempted to withdraw some of his purported Rs 14 crore profit, the scammer demanded more money as a ‘withdrawal tax,’ raising suspicions and leading to a police investigation.

Kotak Securities, one of India’s largest brokerage houses, recently warned investors against unknown individuals posing as their officials. “Unethical entities and individuals have been conducting fraudulent activities using Indian and international mobile numbers and social media platforms,” stated Kotak Securities in a media release on June 20. Although the impersonated app wasn’t Kotak Securities’, their spokesperson told Moneycontrol that multiple brokerage firms, including Kotak Securities, have received numerous complaints about similar impersonation scams targeting investors.

With the stock market on the rise, many investors fear missing out. The S&P BSE Midcap returned 31 percent in the last six months and 61 percent over the last year, while the S&P BSE Sensex returned 10 percent and 22 percent, respectively. This ‘fear of missing out’ (FOMO) has led investors to seek high returns, sometimes without considering the risks involved.

Common Traps to Avoid in Stock Market Investments

1. Promises of High Returns with Low Risk: Be wary of investment opportunities that promise high returns with minimal risk. Legitimate investments inherently carry some level of risk. If an opportunity sounds too good to be true, it usually is. Always research thoroughly before committing your money.
2. Unsolicited Investment Tips: Avoid acting on unsolicited investment tips received via SMS, email, or social media. These could be part of a pump-and-dump scheme. Genuine financial advisors seldom make unsolicited calls unless they come highly recommended.
3. Phone Calls and In-Person Meetings: Insist on meeting financial advisors in person. Scammers often avoid face-to-face interactions. Meeting in person allows you to obtain a written investment proposal, which you can discuss with family or friends for a second opinion.
4. Beware of WhatsApp Groups: Con artists use WhatsApp groups to spread misinformation and fake testimonials about investment returns. Avoid groups where people boast about unrealistic gains. Do not click on suspicious links or attachments, even if they come from known contacts.
5. Pressure to Invest Immediately: High-pressure tactics to invest immediately are red flags. Legitimate advisors will provide detailed explanations and give you time to make informed decisions. Avoid investments where you don’t understand the underlying asset.
6. Authenticity of Apps: Verify the authenticity of trading apps by checking the number of downloads and reviews. Be cautious even if an app has many downloads, as some fraudulent apps can fake this data.

In conclusion, the rising stock market has made many investors anxious about missing out, but it’s crucial to remain vigilant and conduct thorough research before investing. Always seek advice from trusted and recommended financial advisors, and avoid falling prey to scams promising quick and unrealistic returns.