Tips! Tips! Tips! Even experienced traders and investors can fall into the trap of seeking easy and quick profits.
Recently, we came across the case of Madhulika (name changed), who got scammed by a fake advisory company. The company operated on a 50% profit-sharing model and provided tips that initially generated profit but eventually wiped out both the profit and the principal amount.
Madhulika, an experienced investor who usually invested only in IPOs, ended up losing ₹1.5 lakh in this scam. She is still in contact with the company, hoping to recover her capital.
Before diving into Madhulika’s narrative, let’s address why these scams happen.
Why do people like Madhulika, who even after having an understanding of technology and the stock market, easily fall into such scams?
The answer is simple: they seek easy profit. And there is no such thing, especially in the stock market. Consider the statement often heard after mutual fund ads on television:
“Investments are subject to market risk; please read all documents carefully before investing.”
When experienced fund managers, who invest your capital in mutual funds, do not guarantee profits or returns, how can these companies, which claim to be SEBI-registered, assure you of returns?
And even if they do, why do traders and investors invest without raising questions or concerns?
This negligence often results in heavy losses that are sometimes impossible to recover.
Additionally, these market scammers give you another red flag by providing multiple bank details, UPI links, and barcodes for payment.
Have you ever heard of a registered entity taking payments in random accounts?
Ignoring these signs makes the scammers’ job easier, allowing them to run away with your hard-earned money overnight.
Returning to Madhulika’s case, she provided the following details:
ADB: Hello Madhulika, we came across your concern about being scammed by a tip provider.
Madhulika: Yes, sir. I am an investor and generally apply for IPOs. Recently, a company named Index Research (name changed) messaged me on WhatsApp.
They told me that they provided tips with a 100% guaranteed return. They kept calling me for 3-4 days and finally asked me to take a demo.
In the demo, they provided a tip that earned me a profit of ₹15,000. They then said that since I earned a profit, I had to share 50% of it with them. They shared a barcode on WhatsApp, and I made a payment of ₹7,500.
However, they gave me another tip in which I lost ₹15,000 on the same day.
When I raised my concern, they said this sometimes happens but they would help me recover the loss the next day.
The following day, the same pattern followed: I first earned a profit and then lost the entire earned amount and my capital by the evening.
This continued for 4-5 days, and eventually, I ended up losing my entire capital of ₹1.5 lakh.
ADB: Did you contact them?
Madhulika: I stayed in touch with them. They asked me to arrange some capital to help recover the loss, but that was their trap. I lost that amount too.
Despite my continuous calls and messages, they gave me a number for the recovery department. However, I received the same response from them—to add more capital to the account.
I did it again and arranged ₹12,500, which I lost in another trade they provided me.
ADB: Were they SEBI-registered?
Madhulika: They have a website, so I assumed they are.
ADB: Having a website does not make anyone SEBI-registered. SEBI provides a unique registration number to Research Analysts, allowing them to provide tips and advisory services following proper norms and regulations.
Based on your case, it is clear that this company is not SEBI-registered.
In this case, file a complaint on the SEBI Scores portal. There are chances that you might get a refund of the fees, but the chances of recovering the lost amount are slim.
Madhulika: That’s bad! This means I won’t get my amount back.
ADB: There is a possibility where we can draft a case and first try to reach out to the company. Maybe we could find some hope of recovery. Hold some patience!
In such cases, quick action increases the chance of recovery. So, gather all your documents and proof, and we will start the drafting process.
Madhulika: Okay, thanks!
