Fraudsters and scamsters are always on the lookout for new traders who are not well-versed in the stock market. They lure these novices with various schemes, courses, and recommendations.
Since beginner traders are often unaware of regulations, they easily fall prey to these scammers and lose lakhs of their hard-earned money.
A similar case happened with Prakash (name changed), who opened a demat account and received an unknown call a month later. The caller promised to teach him about the stock market but instead gave him tips.
After facing losses, Mr. Prakash stopped using his services. However, he later received another scam call and incurred a loss of ₹2,00,000.
Here is a narration of the incidents that took place with him a few months after opening a demat account.
Prakash: Hi, I need help with a situation involving my trading account.
ADB: Sure, please explain what happened.
Prakash: I opened a Demat account in December and am new to the market. In January, someone called and offered to teach me about the stock market. I agreed.
ADB: Did this person provide any credentials or indicate their experience in the market?
Prakash: He didn’t provide credentials, but he seemed knowledgeable and gave me some good tips initially. He gave me tips, and initially, I made some profit in options trading.
Later, I incurred some losses. He told me it’s part of the market. He suggested handling my account to avoid missed trades. I trusted him and gave him access.
ADB: When you gave him access to your account, did you sign any agreement or was this an informal arrangement?
Prakash: It was an informal arrangement over WhatsApp. Initially, he made some profit, but eventually, I lost my entire capital. This interaction happened via WhatsApp, and they charged me ₹6999 for registration.
ADB: Do you have any proof of the ₹6999 payment and your conversations?
Prakash: Yes, I have the payment receipt and all our WhatsApp conversations. After this loss, I took back control of my account and started trading myself. The next month, another person called, claiming to be from FIND STOCK HOUSE PVT LTD (Name Changed).
ADB: Did this new person provide any proof of their affiliation with FIND STOCK HOUSE PVT LTD?
Prakash: He mentioned he was an employee and later connected me to his manager. He offered tips in options trading. I didn’t trust him at first but was convinced to talk to his manager. The manager seemed trustworthy and said they were a registered entity. I paid ₹5000 as a registration fee.
ADB: Did you verify their registration or check their credentials?
Prakash: They claimed to be registered, but I didn’t verify it independently. Initially, they helped me make a profit and then encouraged me to invest more for bigger profits. They charged ₹100000 as a fee for generating large profits. I trusted them and paid the fee.
At first, there was some profit, but soon I incurred a loss of over ₹200000. The manager’s name is Anubhav Gupta (name changed). I paid into an account in Indore. They claimed it was their accounts team.
ADB: Do you have any documentation of these payments and the communications with Anubhav Gupta?
Prakash: Yes, I have all the payment receipts and messages. I realized it was a third-party payment. They asked for more fees in advance, which raised my suspicion.
ADB: Thank you for detailing your experience. Here’s what you should do:
– For the registration fees and losses due to their misguidance: Email SEBI with the full details and all evidence, including payment receipts and WhatsApp conversations.
– For the potential fraud: Contact cyber securities to report the online fraud and financial scam. Provide them with all relevant details and evidence.
Prakash: Thank you. I’ll do that.
The case of Prakash highlights some critical lessons for new traders:
