If you want to trade in the stock market by following tips and recommendations, make sure you follow SEBI-registered Investment Advisors (IA) and Research Analysts (RA).
Before using their services, it is important to validate their registration ID. Also, every tip and recommendation given by them must be backed by a proper reason.
If your research analyst is providing tips and recommendations without any proper reason, this is a significant red flag, and it is time for you to be alert.
Recently, we came across a case where Kamal (name changed) was scammed by one of the Research Analysts who had rented his services to an unregistered person.
Kamal: Hello ADB, I want to tell you about the unethical practices of one of the research analyst firms INVESTORS RESEARCH ANALYTICS PRIVATE LIMITED (name changed).
They are using unethical third-party franchises and rents out his brand name.
ADB: How do you know that?
Kamal: I was contacted by one of these franchises regarding their services, and they even offered some trials to gain my trust.
ADB: So, they managed to convince you?
Kamal: Yes, they did. They offered me a monthly service for ₹30000 for stock options and F&O tips. I paid the ₹30000, and they started giving me various recommendations. They told me not to do anything on my own, just follow their advice.
ADB: Did their recommendations work?
Kamal: Not at all. After buying, they asked me to hold until expiry, and my entire amount went to zero.
When I objected, they assured me I would recover my losses in the next trade. This happened repeatedly.
ADB: That’s terrible. Did you try contacting the research analyst directly?
Kamal: Yes, I did. I used the number provided on the invoice, but they denied knowing the person who was working with me. However, this same person provided the invoice and tips on behalf of the company through WhatsApp.
ADB: Do you have proof of these transactions and communications?
Kamal: Yes, I have all the payment details to the analyst, the invoice, and all the chats with the person, Kiyansh Jain and Ameer (names changed). When I asked for compensation, they directly refused.
ADB: That’s a serious issue. Have you filed a formal complaint?
Kamal: Yes, Sir. I’ve made a complaint on exchange portal.
ADB: Okay, along with this we can sent a mail to SEBI about this fraud.
Kamal: Yes sir.
ADB: Please share all the proof you have.
And soon after gathering all the documents our team started working towards drafting and documentation to file a complaint in SEBI. After a few days of reporting the case, the scammer reached out to Kamal and tried to misguide him. Here is what Kamal told us about this.
Kamal: Sir, I received a call from him and he said that nothing would happen on filing a complaint as he can just offer ₹10,000 to regulatory to close this case.
Can such things happen?
ADB: No, nothing like that would happen, he is just trying to mislead you so that you can take your complaint back.
The patience of Kamal proved to be rewarding and after a few days of filing a complaint the scammer agreed to refund the fees amount of ₹30,000.
Since it was a case of non-registered entity, hence the SEBI could not help in recovering of amount lost in trade. Hence, the case was closed.
So, here Kamal recognized the red flag in time and saved himself from bigger losses.
However, it is not right to define losses as big or small. Eventually, losses are difficult to handle, and therefore, one must stay alert to avoid getting involved with any unregistered analyst services.
It is also crucial to validate all the details before buying any services from registered entities as well.
