An Initial Public Offering (IPO) is a process through which companies in India list on the stock exchange. Companies must first get approval from SEBI, after which they declare the issue date and finally the listing date on the exchange.
Generally, one can apply for an IPO for three days, followed by the allotment and then the final listing. It is important to note that a maximum investment of ₹2 lakh per PAN Card is allowed.
Like other stock market investments, one can invest in IPOs using a stock broker’s trading app by following the ASBA process. In this process, the amount you invest in buying an IPO is blocked in your bank account and is debited only if the IPO is allotted to you.
This means there is no need to transfer money to anyone’s account to invest in the IPO.
The Indian stock market has structured a simple IPO investment process using registered platforms to prevent frauds or trading scams. However, investors who are not aware of this often end up losing their hard-earned money.
Almost every day, our team encounters 3-4 IPO scams where people lose from a few lakhs to crores of their capital.
Mr. Mukesh (name changed) recently shared one such IPO scam with us where he lost around ₹20 lakhs. Here are the complete details:
One day, he received a message on WhatsApp from Stock India Securities Pvt. Ltd. (name changed). Like other messages, the scammer promised unrealistic returns to lure his next target, Mukesh.
As expected, he clicked on the link, which redirected him to a fake trading app. He downloaded it and followed the instructions provided on WhatsApp.
At first, the company made him invest in Block Deals, where Mukesh started with an amount of ₹30,000 and gradually increased it to ₹8,00,000.
In between, he also withdrew an amount of ₹60,000 in two installments. In such cases, the victim could not figure out the scam or the scammer’s objective.
A few days later, he received a message to invest in the IPO of a company. Although he had heard about IPO investment, he was not fully aware. A few days later, the scammer messaged him again, claiming that he had received an IPO with total shares worth ₹25 lakhs.
Mukesh was told he needed to submit the remaining balance of ₹17 lakhs to get the shares in his account. He arranged ₹12 lakhs and deposited it into the scammer’s bank account. In total, he transferred around ₹20 lakhs.
Post this, his number was blocked, and he was neither able to withdraw his deposited amount nor contact the company.
Once again, scammers successfully targeted someone, leaving Mukesh with no option but to hope for a refund of his lost amount.
However, in such cases, one can file a Cyber Crime complaint with all the proof and evidence they have, such as:
- WhatsApp Screenshots
- Bank Transaction Details
With all the other details and proof, he sought help from our team on how to file a cyber crime complaint and other portals that could increase the chance of a refund and recovery of his lost amount.
This incident was a week old when Mukesh reached out to us, and it has been seen that the quicker the filing of the complaint, the higher the chances of getting proper support from the respective department.
Mukesh could have saved himself from being scammed if:
- He was fully aware of IPO investment.
- He had done a proper background check of the company.
- He questioned the need to deposit money into different bank accounts.
Your negligence is the biggest cause of losses. It is, therefore, important to be careful with your money and stay away from promises of guaranteed or high returns.
