According to the regulator, some members of these groups work with the operators to post false claims of profits and praise the so-called market experts. This practice, known as astroturfing, creates a false impression of genuine support and encourages unsuspecting investors to follow the trading calls.
SEBI also warned investors about a tactic used by operators after authorities act against such groups. Members may receive messages, usually from a new number, claiming that the previous group has been banned due to the social media platform’s risk-control measures. They are then invited to join a new group offering daily stock recommendations and trading guidance.
Investors should treat messages announcing that a group has been suspended, closed or banned, followed by an invitation to join another group, as warning signs and exit such groups, SEBI said.
The regulator further cautioned investors against opening accounts on trading platforms or apps recommended by these groups, transferring money to them or sharing details of their holdings and trading accounts.
SEBI advised investors to deal only with registered intermediaries and use authentic trading apps. Investors can check the registration status of intermediaries on SEBI’s official website and verify trading apps through its investor support portal.