Caution to public against Fraudulent / Manipulative activities on Social Media Platforms (SMPs) related to securities market

## Report on SEBI Public Caution Regarding Fraudulent Activities on Social Media Platforms **1. Executive Summary:** This report analyzes a public caution issued by the Securities and Exchange Board of India (SEBI) regarding the increase in fraudulent and manipulative activities related to the securities market on Social Media Platforms (SMPs). The core purpose is to advise investors to exercise caution and due diligence when engaging with investment opportunities promoted on SMPs and to deal only with SEBI-registered intermediaries. Key findings highlight the prevalence of unregistered advisory services, impersonation of registered entities, and misleading content used to lure investors into fraudulent schemes. **2. Introduction:** This report provides an informative overview and analysis of SEBI's public caution (PR No.222025) concerning fraudulent activities on Social Media Platforms (SMPs) related to the securities market. The analysis is based solely on the text provided in the public caution notice. **3. Policy Overview:** * This is a new public caution, not an amendment to an existing policy. * **Core Objective(s):** The primary objectives are: * To alert investors to the growing prevalence of securities market fraud on SMPs. * To advise investors to exercise caution and perform due diligence when using SMPs for investment decisions. * To encourage investors to only engage with SEBI-registered intermediaries and authentic trading apps. * To inform investors of the recourse limitations when dealing with unregistered entities. **4. Background and Rationale:** As a new public caution, the policy addresses the escalating issue of securities market fraud perpetrated through various Social Media Platforms (SMPs). The text highlights the increasing adoption of digital communication platforms, which has been exploited by scamsters to entice victims with trading calls, misleading testimonials, and promises of guaranteed returns. The policy addresses the risks associated with unregistered investment advisors, impersonation of registered entities, and manipulative content designed to lure investors into fraudulent schemes. **5. Key Provisions / Changes:** As a new caution, the entire text establishes the following key provisions: * **Identification of Fraudulent Activities:** The caution identifies common types of securities market fraud on SMPs, including: * Unregistered investment advisory services falsely claiming registration with SEBI. * Impersonation of SEBI registered entities through fraudulent trading platforms and channels. * Misleading content designed to attract investors to private chat groups. * Fake trading advisory apps offering preferential services. * **Investor Advisory:** The caution advises investors to: * Exercise caution and due diligence in verifying the genuineness of social media handles of SEBI registered entities. * Deal only with SEBI registered intermediaries and authentic trading apps. * Note the 1600 phone number series used exclusively by intermediaries for service and transactional calls. * **SEBI's Stance:** SEBI advises investors to not engage with or undertake investment or trading activities through unregistered intermediaries, web applications, or platforms. * **Loss of Recourse:** The caution explicitly states that investors engaging with unregistered entities will not have access to investor protection benefits, exchange jurisdiction (including SCORES), grievance redressal mechanisms administered by Exchanges or the online dispute resolution mechanism. * **Public Reporting:** The public is invited to share details of any unregistered entities offering advisory services on securities via the Market Intelligence (MI) portal of SEBI. **6. Target Audience and Stakeholders:** The primary target audience is: * **Retail Investors:** The caution is directly aimed at individual investors participating or considering participation in the securities market. Other stakeholders include: * **SEBI-Registered Intermediaries:** The caution indirectly impacts these entities by emphasizing the importance of verifiable registration and authentic trading apps. * **Social Media Platforms (SMPs):** While not directly regulated by this specific caution, SMPs are implicated as the channels through which fraudulent activities occur. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** SEBI is the primary responsible body for issuing and enforcing this caution. The Market Intelligence (MI) portal is mentioned as a channel for public reporting, suggesting a role for SEBI's surveillance and enforcement departments. * **Timelines/Procedures:** The document does not specify timelines for implementation, but it establishes a procedure for investors to verify the registration status of intermediaries using the provided web links. It establishes the 1600 phone number series as a means to identify service and transactional calls. * There are no implementation aspects that can be inferred related specifically to changes introduced. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of this public caution are: * **Increased Investor Awareness:** Raising awareness among investors about the risks associated with securities market fraud on SMPs. * **Reduced Engagement with Unregistered Entities:** Discouraging investors from engaging with unregistered intermediaries and platforms. * **Enhanced Due Diligence:** Encouraging investors to exercise greater caution and perform due diligence before making investment decisions based on information from SMPs. * **Increased Reporting of Fraudulent Activities:** Promoting the reporting of unregistered entities and platforms offering advisory services through the MI portal. * **Mitigation of Financial Losses:** Ultimately, the caution aims to mitigate financial losses suffered by investors due to fraudulent activities. **9. Conclusion:** SEBI's public caution regarding fraudulent activities on Social Media Platforms serves as a critical warning to investors navigating the increasingly complex and potentially risky landscape of online investment. By highlighting the prevalence of scams and providing clear guidance on due diligence and verification, the caution aims to protect investors from financial harm and promote a more secure and transparent securities market. The significance lies in its proactive approach to addressing emerging threats in the digital age and empowering investors to make informed decisions.

Key Entities Referenced