India’s investor population has nearly doubled since the lock-down forced by the COVID pandemic in March 2020. This means that over half the investors today—almost 20 million of them—are first-time investors in the stock market. They are attracted by a ferocious bull run that has allowed many first-timers to make a lot of money, as the popular BSE Sensex, which hit a low at 25,638 on 24 March 2020 (a day after the first hard lock-down), has soared an extraordinary 234% in 22 months to close at 60,109 on 19 January 2022.
Tipsters Galore
Although the new influx includes some serious, tech-savvy traders who study investment literature and try to grasp the risks associated with the capital market, a vast number is lured by the ease of online trading and the illusion of high returns, broadcast in social media. The situation is perfect for the proliferation of stock market scams and a big business opportunity for fraudsters and confidence tricksters. This is a global trend and regulators usually cannot keep up with the pace and innovative strategies employed to fool people.
The Securities and Exchange Board of India (SEBI), like other regulators, has issued warnings periodically asking investors to be cautious; it has also threatened to crack down on illegal investment advice and tipsters using social media to entrap investors. Unfortunately, these warnings are largely ignored, until people suffer losses.
On 13th January, SEBI completed a relatively quick…
