Stock recommendations and call tips scams are increasing drastically these days. People are falling victim to unregistered individuals who induce them with profit screenshots and later ask for fees, account handling, or profit sharing.
On the other side, there are registered Research Analysts who are not following SEBI guidelines and using their registrations and certificates unethically to loot people.
Research Analysts are SEBI-registered individuals who have the right to provide call tips and recommendations to retail traders. However, they need to follow certain guidelines:
- They cannot induce their clients by showing them P&L or profit screenshots of other clients.
- They need to provide valid reasons for the specific tips and recommendations given.
- They cannot take or hold positions in the stocks they recommend.
- They cannot give any assurance or guaranteed return on investment.
Violation of any of the above regulations makes them liable to pay a penalty and refund the fees and loss amount to their clients. However, hardly any retail trader is aware of this, which eventually leads to the loss of their capital.
Here is one instance where we found that a Research Analyst, Shekhar Diwedi (name changed), is using his registration numbers on five different websites.
This raises the question: which one is the real one?
Here is how we discovered this scam:
Amrik (name changed) was influenced by Research Analyst Shekhar Diwedi Shekhar promised him a guaranteed return and induced him by showing P&L statements of other clients.
Shekhar further violated regulations by assuring Amrik of a profit of INR 1 lakh to 1.5 lakh and recovery of all his past losses. Amrik asked for his registration details and checked them on the SEBI website. After validating the registration, he agreed to buy Shekhar’s plan worth ₹35k.
Not having enough money, Shekhar offered Amrik the option to pay ₹15,000 upfront and the remaining ₹20,000 after earning a profit. This further influenced Amrik.
Also, Amrik was already in a loss of ₹20k-25k, so in order to recover his losses he immediately bought Shekhar’s services.
Initially, Amrik earned a profit in some trades, with which he paid his pending fees. However, soon things didn’t turn out as promised. Amrik, who started trading with ₹70k, lost his entire capital in a day as Shekhar advised him to trade in maximum quantity.
When Amrik contacted Shekhar, he was asked to buy a premium plan of INR 1 lakh, which promised premium tips that would not only help recover his losses but also double his capital.
When our team member checked Shekhar’s registration number on the SEBI website, it was confirmed that the tips were provided by a registered Research Analyst.
However, when we tried to search for the name of the entity and Shekhar Diwedi, the details were not there on the SEBI website.
This left us with many questions and confusion.
Upon further investigation, we found that our team had registered 15 more complaints with the same registration number but different company names.
This is a scam, and out of the 15 similar complaints we received, we are still in search of the genuine company registered with SEBI as a Research Analyst.
What if none of those are genuine?
Many scams are going around where retail traders, even after validating details, fall victim and lose their hard-earned money. In the above case, Mr. Amrik could have saved himself from losses if he had been aware of SEBI guidelines and regulations.
While SEBI introduces many guidelines and regulations, it takes no initiative to make retail traders aware, leading to financial loss and some quitting trading in the stock market altogether.
Thus, it becomes important for a retail trader to stay responsible towards their money.
Stay Alert! Stay Safe!
