There are multiple opportunities to make money and earn a profit.
Stock market investment is one of those options. But profit is not only earning money, but it is also about protecting your capital from fraudsters & scammers.
Unawareness of market regulations and other parameters leads beginner traders to fall into the trap of profit-sharing scams.
Let’s dive in to understand all about this scam, how scamsters use this for their own benefit, and how you can protect yourself from falling victim to it.
Profit Sharing Scam
Answer honestly, if someone approaches you and shows you fake P&Ls, fake money, and shows you dreams of getting rich overnight by trading in the stock market, how many of you get influenced?
Well, most of you!
This is what is happening nowadays, and these scammers are taking advantage of this.
Among different types of scams, profit sharing typically involves fraudulent investment advisory firms or individual advisors who promise investors a share of the profits from stock market trades.
These scamsters ask you to share your account details with them, which they use on your behalf to take trade positions using your capital, and in turn ask for 50:50 or 60:40 profit sharing.
In all funds are yours, the account is yours, but the one controlling & operating is the one who is using it for his or her benefit.
If you came across any such scheme, then it is time to get alert, your capital is in danger.
Profit Sharing Scams Risk in India
Profit-sharing fraud in India is becoming increasingly common, and they work in very predictable but dangerous ways.
Here’s what usually happens:
- You send money but never receive real profits: Scammers often show fake P&L screenshots or demo profits to lure you. You think your investment is growing, but the gains are fabricated, and your real money is at risk.
- Control over your funds: The biggest danger is handing over your account credentials. Once someone else controls your trading account, they can execute trades at their discretion, putting your capital in high-risk positions without your knowledge.
- Brokerage churning: Some brokers or advisors may push trades not to maximize your profits, but to increase their own brokerage. This leads to excessive buying and selling, which drains your account through fees, even if the trades don’t generate any real profit for you.
- Recovery loop traps: Many scammers use “small installment” tactics. They ask you to deposit ₹10,000 at a time, making it feel manageable. Once trust is built, these repeated requests snowball into much larger sums, sometimes totaling ₹1 lakh or more, before the losses hit.
- Psychological pressure: Scammers often create a sense of urgency, “The market is trending, act now,” to force decisions. This pressure makes it hard for investors to pause, research, or step back, increasing the likelihood of losses.
- False promises and guarantees: No registered Research Analyst (RA) or Investment Advisor (IA) can legally guarantee profits. Any promise of fixed returns or profit-sharing on your account is a clear red flag.
Profit-sharing scams risk not just your money, but also your confidence and peace of mind.
Always verify credentials, never share account access, and treat “guaranteed profits” as a warning sign.
Trading Account Handling with Profit Sharing
Before we continue, a common question arises: Can a Research Analyst Share Profit in India?
The short answer: legally, no. Research Analysts can give advice but cannot execute trades or enter profit-sharing arrangements with clients.
Similarly, Can an Investment Advisor Share in Profits?
The answer is the same; they can provide guidance, but they are not allowed to take a share of client profits. Understanding this is crucial to avoid getting trapped.
However, a lack of knowledge of SEBI regulation make it easier for a registered entity who misuse their SEBI license to lure people by showing fake profits or past performance.
On the other side, unregistered entities too are involved in such scams. They reach out through some ads on social media or reels showing fake money, P&L, etc, where they left some kind of link for you to get in touch.
Once you click on that link and add your details, you will be added to one of the WhatsApp or Telegram Groups. Not for your benefit, but to induce you more by showing fake P&Ls of their fake client and fake trades.
In no time, you get influenced and check his products & services.
Here, scammers leave no room for you to go back and offer you a profit-sharing agreement with guaranteed profit and attractive numbers.
That’s it, you end up getting into the agreement.
Now, the scam begins.
Scammers work to gain your confidence initially by delivering small profits. Once they gain your trust, they ask you to add more funds to your trading account.
As soon as you add more funds, the scammer takes maximum position in the market, resulting in the loss of the entire capital and then disappears from everywhere.
By the time you realize what has happened, it’s often too late to recover the funds.
We’ve seen many cases like this, and here are two of the real case studies showing how these scams unfold, situations where we’ve helped investors deal with the fallout and take action to recover their funds:
1. Grow Investment Profit Sharing Scam
Suryaprakash (name changed) came across an Instagram page named Grow Investment (name changed) and entered his details.
Soon, he received a call from someone claiming he could provide 100% profit while keeping 50% for himself.
Not fully understanding the stock market, Suryaprakash agreed and shared his account details.
He added ₹2,00,000 to his Groww Demat Account. Later, he was asked to deposit another ₹1,00,000 to “maximize profits.”
Believing the scammer’s assurances, he complied.
The scammer used the entire capital to trade Bank Nifty Options. Within a short time, Suryaprakash lost almost 90% of his funds.
When he asked the scammer to square off, they refused, and eventually, all his capital was wiped out.
2. Intratrade Research and Technology
Another investor joined a WhatsApp group run by Intratrade Research and Technology, which claimed SEBI registration.
They were shown screenshots of profits and told they could participate in a profit-sharing model, only if they shared their account credentials.
Excited at the potential gains, the investor complied.
Within days, trades were executed directly on their account without approval, and the “profits” never appeared.
Later, it became clear that the screenshots were fabricated, and the account had been misused.
How to Protect Yourself from Profit Sharing Scams?
1. Do Your Research: Check the background of anyone who approaches you. Even if they are SEBI-registered, never share your login credentials.
You can take advice, recommendations, or guidance for trading, but only with proper documentation. If someone promises guaranteed returns or “dream profits,” take a step back; this is a major red flag for a potential scam.
2. Don’t Follow Anyone Blindly: Social media platforms like YouTube, Instagram, and others are full of trading videos. It’s your responsibility to verify the credibility of any channel or influencer before taking advice or subscribing to their services.
Even if a source seems professional, always validate their registration and track record.
3. Be Wary of Pressure Tactics: Scammers often use high-pressure techniques to rush your decisions.
Take your time, evaluate their claims carefully, and never succumb to intimidation or urgency.
4. Report Suspicious Activity: If you suspect you are being scammed, report it immediately to the relevant authorities. In India, complaints can be filed directly with SEBI through its official channels.
Acting quickly can prevent further losses and help authorities take action.
How to Report Profit Sharing Scams in India?
If you’ve shared your account credentials or notice unauthorized trades, or if a “manager” refuses to return your funds, it’s crucial to act immediately.
At FraudFree, we don’t just offer guidance; we actively help you recover your money.
Once you register with us, we follow a structured profit sharing scam recovery process to fight for your losses:
- Drafting a Formal Complaint: We prepare a detailed legal complaint addressed to the broker’s compliance team, creating a strong paper trail.
- Filing a complaint with SEBI SCORES: Your case is submitted on SEBI’s official grievance portal with all supporting evidence to ensure the regulator’s attention.
- Filing a complaint Smart ODR: We assist in filing complaints through the stock exchange’s Online Dispute Resolution platform to work toward an official settlement.
- Arbitration in Stock Market: If the matter is not resolved, we represent you in SEBI-appointed arbitration in stock market proceedings to secure a final legal verdict.
This systematic approach not only strengthens your recovery claim but also increases regulatory scrutiny on the offending entity.
Conclusion
The profit-sharing scam works on the trust and aspirations of investors.
Stay aware of market rules & regulations. By investing a little time in doing proper research, you can protect yourself from falling victim to such loss-making schemes.
Remember, if an investment opportunity sounds too good to be true, it probably is.
Stay informed, stay cautious, and safeguard your hard-earned money.
