SEBI warns of WhatsApp stock tips and planted profit claims

India’s securities regulator SEBI has warned investors against invitation-only WhatsApp groups where people posing as market experts circulate unauthorised stock recommendations and use fabricated profit claims to attract followers, according to Economic Times Markets’ October 22 report.

The regulator said unregistered individuals were running closed groups, often using overseas mobile numbers, and presenting buy-and-sell recommendations as free investor education. It urged investors to verify the identity and registration status of anyone offering advice and to deal only with registered market intermediaries.

How planted testimonials build trust

SEBI described a tactic known as astroturfing: coordinated or fabricated messages that make an operator appear to have genuine public support. In these groups, people working with the operators may claim to have profited from recommendations and praise the supposed expert’s judgement.

Such messages are intended to persuade other members that the trading calls are dependable. The regulator cautioned that profit testimonials and claims of successfully completed trades may be planted, rather than independent accounts from investors.

A replacement group is another warning sign

The warning also covered attempts to keep groups operating after enforcement or regulatory action. When one group is suspended or banned, investors may receive an invitation from a different mobile number directing them to a replacement.

In an example cited by SEBI, an invitation blamed the earlier group’s closure on the platform’s risk-control measures and offered continued daily stock recommendations and trading guidance. The regulator advised investors to leave such groups rather than move with their operators.

What investors should check before acting

SEBI advised investors to avoid closed WhatsApp groups run by unknown individuals or self-described market experts, particularly those using overseas numbers. It also warned against treating other members’ praise or profit claims as a basis for investment decisions.

The caution extends beyond the stock recommendations themselves: investors should not open trading accounts or download applications on the instructions of these groups. SEBI urged them to use authentic trading applications and registered intermediaries, and to independently check an adviser’s identity and registration before acting.