Investing in the stock market can be a lucrative endeavor if done right. However, even legitimate-sounding companies can lead to significant financial losses.
Here is one such case where a retail trader Shubham (name changed) had a bad investment experience with one of the SEBI registered advisory firm.
Shubham: Hello ADB, I want to file a complaint against SEBI registered advisor who claimed guaranteed returns and leads to loss of ₹2 lakh.
ADB: Okay Shubham, please elaborate and give a brief what exactly happened.
Shubham: The journey began with an enticing offer from a SEBI registered company. They promised expert advice and profitable tips for a fee of ₹50,000. I was also offered a yearly package worth ₹97,000.
I checked their website where they had mentioned a SEBI registered number.
So, I found it reliable.
Also, they claim 99% accurancy and no-loss making tips. So, I got intrigued by the potential for high returns and decided to invest.
ADB: Did you receive any confirmation email on making a payment?
Shubham: I paid in parts and received confirmation emails and calls from their registered number.
ADB: So, did their tips work?
Shubham: For the first two weeks, the company’s tips seemed to work wonders. I saw a noticeable profit, which boosted my confidence in their services.
However, this success was short-lived. Soon after, both my profit and capital began to dwindle. Over time, I experienced a loss of more than ₹2 lakhs.
Then I decided to take a break from trading and later after 2-months I resumed trading. But another advisor was assigned to me who provided me tips for 1 more month. However, I didn’t see any significant difference but continued with the hope of recovering my losses.
Then, after 1 month, I received a call from them where one lady told me that my plan had been expired and to continue their services I had to pay fees.
ADB: But you paid for 1-year plan initially.
Shubham: Yes, and I raised my voice against this. I called them multiple times and sent emails mentioning that I didn’t get returns as they mentioned in the beginner.
ADB: Did it help?
Shubham: Yes, on my continuous efforts, the company provided me services for 2-months boasting a 99% accuracy rate and guaranteed profits.
However, this promise was empty. Eventually, they blocked me entirely, cutting off all communication.
ADB: Okay Shubham, I understood you case. It is a violation of SEBI IA and RA regulation. But before proceeding ahead, want to know few more things.
Shubham: Yes, please ask.
ADB: Did you receive the call from the number registered on their website or from different number?
Shubham: They provided tips through phone calls from a single number, and their hotline number listed on the website always connected to a reception desk. Different advisors called me, which seemed highly unprofessional and suspicious.
ADB: So, again they violated SEBI regulation by calling you from different numbers.
We can go ahead with the complain in SEBI portal. Do you have all the proofs of the transaction & fees you paid to the firm?
Shubham: Yes, I have all the proofs.
ADB: Great! we can then document all the proofs and draft a complain against the entity.
Shubham: Thank You for the help!
What Lessons You can Learn form This Incident?
Well, there are many learnings from this incident that you can apply and safe yourself from such scams & frauds.
- Research Thoroughly: Even if a company claims to be SEBI registered, conduct thorough research. Look for reviews, testimonials, and any red flags before committing your money.
- Question Promises of High Returns: Be wary of guarantees of high returns and accuracy. The stock market is unpredictable, and no one can guarantee specific outcomes.
- Verify Communication Channels: Ensure the company has legitimate and professional communication channels. Multiple advisors and inconsistent contact methods are often signs of a scam.
- Be Prepared to Walk Away: If you feel uncomfortable or sense something is amiss, trust your instincts. It’s better to cut your losses early than to be drawn deeper into a scam.
