6 hours Ago By Abdul Nazer M A
KOCHI: Suresh (name changed) came across an investment opportunity on social media that promised returns ranging from 150% to 300%. After persistent persuasion, he was added to WhatsApp and Telegram groups, where he committed to invest a small amount. Initially, the group operators shared graphs and reports showing exponential profit growth and even provided an option to withdraw a portion of the earnings, making the scheme appear legitimate.
On being convinced, Suresh invested larger sums multiple times. However, once he was fully committed, the group became unresponsive, and operators vanished without a trace. It was only then that Suresh realised that he had fallen victim to online fraud.
This is a common modus operandi employed by fraudsters in online-trading scams. However, another case of cheating that unravelled in Irinjalakuda, Thrissur last week saw a fraudulent trading firm deceiving investors by luring them into a scheme. Here, too, investors received the promised massive returns for the first five months, before the fraudsters siphoned off nearly Rs 250 crore.
Despite such cases, financial experts caution that not all trading firms or investment schemes are fraudulent and emphasise the importance of careful scrutiny before investing. “More individuals enter stock trading when the market is performing well or at its peak. During these times, some entities lure investors with eye-catching promises of returns, ranging from 30% to over 50%.
Believing these claims, many people invest heavily, often without understanding the risks,” says Nikhil Gopalakrishnan, an investment consultant and CEO of Pentad Securities, a stockbroking firm. He points out that scammers exploit the financial illiteracy, greed and innocence of investors. Cautioning against chasing quick money, Nikhil urges investors to exercise control over their expectations of high returns.
Speaking on safe investment practices, he adds, “Investors should, whenever possible, manage their own investments after gaining adequate market knowledge. Alternatively, they should seek guidance from registered stock brokers, mutual-fund distributors, or portfolio management service (PMS) companies.” Even in such cases, he emphasised the importance of verifying the credibility of these entities before investing.
Responding to the rise in cyber fraud linked to trading and stock markets, M Ramachandran, a Kochi-based mutual-fund distributor, emphasises that these scams stem from the desire for high returns and massive profits. “Returns on investment cannot be guaranteed by anyone. An authorised share broker can make an informed judgement based on experience, but even they won’t promise specific returns.
Yesterday’s returns are history and tomorrow’s are unpredictable,” he said. He advised investors to ensure their funds are transferred directly to the accounts of fund houses, rather than to brokers, sub-brokers or personal accounts. “The interest rate of banks like the State Bank of India (SBI) serves as a benchmark.
If a non-banking financial company (NBFC) guarantees significantly higher returns, it is most likely a scam. Fraudsters often pay out for the first few months before disappearing,” Ramachandran warns. He urged individuals to be aware of trading and investment schemes, thoroughly verify details, and understand the guidelines set by regulatory bodies such as the Securities and Exchange Board of India (Sebi) and the Association of Mutual Funds in India (AMFI).
Commenting on the growing number of trading scams, S Syamsundar, inspector general of police (south zone), stresses, “An offer of massive returns is a red flag, and extraordinary profits are most probably a scam. Individuals engaging in stock trading must ensure that funds are transferred only to the accounts of registered companies, not personal or private accounts.” He questioned how a company could offer guaranteed massive returns, when nationalised banks provide just 7-8% interest on fixed deposits.
He urged the public to stay informed about the dos and don’ts of investment schemes and to report any suspicious activity to police without hesitation..
