The right investment can yield good returns, but it should only be done when you are fully aware of the market. Unawareness, greed for high returns, and little knowledge often lead to huge losses.
Recently, in Madhya Pradesh, Prakash (name changed) and 11 others were scammed by a person falsely claiming to be SEBI registered.
It is important to know that even a SEBI-registered individual is not allowed to invest on your behalf. They are only eligible to provide you with proven tips and appropriate reasons.
However, unaware of SEBI regulations, here is what actually happened to Prakash and his 11 friends.
Prakash: Hello, I am Prakash speaking from MP. I need to report a fraud involving 1.5 crores.
ADB: I’m sorry to hear that, Prakash. Can you tell me more about what happened?
Prakash: A few months back, a person opened a company with then name Invest & Earn Money (name changed) in our area and claimed he was SEBI registered. He showed us fake profit returns of his past clients.
ADB: That sounds serious. How did you get involved?
Prakash: Seeing those returns, I, along with 11 other people, jointly transferred 1.5 crores to his bank account. He claimed he would use the money for investment.
ADB: What was your share?
Prakash: My share was ₹25 lakh.
ADB: Did he provide any documentation or agreement?
Prakash: Yes, he gave us a written statement on a paper with his signature, stating that he would invest the amount and provide significant returns. But soon after we made the payment, he shut down his company and disappeared.
ADB: I see. How was the money transferred?
Prakash: We deposited ₹85 lakh through bank transfer and the remaining ₹65 lakh in cash.
ADB: Thank you for the details, Prakash. We’ll need all the documentation and any other evidence you have to proceed with the investigation.
In general, in such cases SEBI does not take any responsibility of the losses made. However, there is a provision where by submitting valid proofs and documents one can expect refund of fees amount.
Key Learnings for You!
Here are some of the key takeaways and learnings from this incident.
- Beware of unrealistic returns
- Do not hand over your money to any registered or unregistered entity.
- Verify credentials
- Understand SEBI regulations.
- Avoid any kind of cash transactions.
