How Registered & Unregistered Advisory Firms Scam You!

In the world of finance, everyone wants to make quick profits and hardly put efforts to learn and develop proper trading skills. This opens a gateway for scammers & fraudsters who await to loot your money.

The scam could be different but the way scammers approach you is similar in most of the cases. It all began with an enticing proposition by a company and promise of high returns.

On seeing your interest they ask you to deposit an amount and give you guarantee of high returns. Now, this is the first red-flag that can help you in identifying such scams.

Even if the registered entity claims any kind of guaranteed return they are violating SEBI guidelines. But for many, especially those with little to no experience in trading, this seemed like a golden opportunity to make quick and substantial profits. Right?

Now, the story does not end here. The company provide you well-researched tips in the beginning that help you to make profit and to gain your trust.

Eventually, you end up adding more funds in your trading account and increase your position sizing significantly. Now, the scammer succeed in meeting their objective.

Seeing the right time, they offer you premium plans claiming more offers & benefits.

The victim who is already impressed with their initial services and having no clue of their objective, end up paying large sum of money.

Under premium plan, you get more tips but the results, they are completely different. Instead of profit, you started making loss.

And when you approach them, you keep in on hearing one common statement, market is volatile and to wait for the losses to recover. You don’t even get the time to understand that what actually happened and all your capital & profit get wiped off.

In the end, they block your number and you are left with no option. But in such cases, you can reach out to market regulator. But the market regulator can also provide you limited help especially if the person or a company is not a registered RA or IA.

The similar case happened with one Woman name Kiran based in Pune who lost ₹7 lakh by following tips of registered RA who later claimed that someone else was using his ID & registration number to provide advisory services.
The woman although got multiple signals that could have saved her from losing money, like:

The scammer asked him to open a demat account using his link.
Later, he asked to transfer money to the third-party bank account.
Even though he said that he was SEBI registered, he was still providing tips on WhatsApp.

If Kiran would have identified these red flags and done proper validation and verification then the story could have been different

Cases like Kiran’s are unfortunately not isolated.

One of the most striking recent examples of how such schemes unfold in detail is the Platinum Portfolios Fraud, where an investor lost over ₹2.02 crore to someone she personally trusted, through fabricated profit statements, unregistered portfolio management, and emotional manipulation that went undetected for nearly two years.

Understanding how that case developed can help investors recognise the same warning signs much earlier..

The Harsh Reality

This unfortunate experience underscores several critical points for investors:

Lack of Proper Trading Skills: Investing based on tips and promises without adequate knowledge or understanding of the market can be extremely risky.
Too Good to Be True: Guaranteed returns, especially those significantly higher than market norms, should always raise red flags. The stock market is inherently volatile, and no legitimate company can guarantee specific returns.
Take the Pain to Validate Details: Always verify the credentials of the company. Even if a company claims to be SEBI registered, it’s crucial to conduct thorough research and seek professional advice.
Regulatory Oversight: Even with SEBI regulations in place, scams and fraudulent schemes can slip through the cracks. It’s essential for investors to remain vigilant and skeptical of extraordinary claims.

How to Complaint Against Stock Advisory?

Now, what to do if you get trapped by any registered or unregistered advisory firms India?

Well, the first step is to gather all your evidence from WhatsApp chats, call recordings, transaction IDs, and screenshots. Now, if the advisory is registered with SEBI, simply lodge a complaint in SCORES.

However, if you have been scammed by an unregistered entity, then drop an email to SEBI and file a complaint in cyber crime to get recover of your losses.

Conclusion

Such incidents can happen with anyone but awareness and alertness can protect you from significant risk and potential losses.

Proper education, skepticism towards guaranteed returns, and thorough validation are vital steps to safeguard one’s financial well-being. Now, in such cases there is a possibility to recover your losses if you file a complaint against RIA (registered investment advisors) without much delay.

SEBI SCORES portal provides you a simple and quick way to report your cases and provide a solution in most of the cases that help traders & investors in recovering their losses.