Stock Market Scams

Common stock market scams, how they lure investors, how to verify intermediaries and where to report fraud in India.

If you have already paid or lost money

Act immediately:

  1. Call 1930 or report the fraud at cybercrime.gov.in.
  2. Contact your bank or payment provider to report the fraudulent transaction, block further unauthorised payments and request urgent protective action.
  3. Stop sending money, including any alleged tax, margin, verification or withdrawal-release fees.
  4. Preserve transaction records, messages, screenshots, account details and other evidence.

Prompt reporting may improve the chances of recovering funds, but recovery is not guaranteed.

For complaints involving registered intermediaries or suspected securities-market misconduct, see What to do if you are scammed below.

Looking for something else? How scams work · How to verify an intermediary or a trade · What to do if you are scammed

What counts as a stock market scam

A stock market scam is fraud, deception or manipulation connected with securities-market activity. It is wider than someone asking you for money or your login details. A misleading tip, a rigged price, a forged notice or a fake trading screen can all cost you money while every trade you place is real and goes through an exchange.

Most of them look credible at first: a polished message, a fake profile, a promise of guaranteed or “risk free” returns, and pressure to act quickly. The common thread is a claim that cannot be true, or a demand no legitimate intermediary needs to make.

Account handling and “guaranteed profit” schemes

In February 2026, SEBI warned investors about persons offering “account handling” services. These fraudsters pose as experts, portfolio management service providers or fund managers, claim to help make risk free profits, ask for a minimum capital and demand a share of profits. They ask you to share your demat and trading account credentials so that they can place trades on your behalf. Profits or losses go directly to or from your account, but you bear the loss and are still asked to pay a share of any profit. SEBI’s warning is that such arrangements are not how a registered intermediary operates, that the loss is the investor’s, and that no account handler can make it go away.

This is not the same as regulated portfolio management or investment advice, which do exist. A SEBI-registered portfolio manager operates under a written agreement and the authorisations the regulations permit, and a registered investment adviser charges disclosed fees. The distinction to hold on to is not “nobody may ever touch your account”. It is that a registered manager does not promise risk free profit, does not take an informal cut of your gains, and does not ask you to type your password and OTP into a chat.

Verify registration at SEBI Intermediaries before dealing with anyone.

Fake tips, finfluencers and “live trading” groups

Unsolicited messages on WhatsApp, Telegram, Instagram, YouTube or X offering tips, VIP groups or “stock calls” are a frequent route. In May 2025, SEBI cautioned that fraudsters create fake profiles impersonating SEBI-registered intermediaries, public figures, company CEOs or well known market participants, use fake testimonials and ask for funds to be transferred to an entity bank account.

In August 2026, SEBI separately cautioned about social media accounts offering “live trading strategies” or real time calls. That warning sits beside a circular dated 8 May 2026, which prescribes a thirty-day lag for the sharing and use of market price data for investor education and awareness, and states that live market data may not be shared for such sessions. The circular sets out the conditions for using price data in education; it does not say that any discussion of current markets is prohibited. The concern SEBI named is narrower and more serious: sessions presented as education that in practice supply live tips, with live chats running unregistered advisory alongside.

If someone gives you a “call” and asks you to transfer money or pay a fee, that is not a legitimate market order placed through your broker.

Fake institutional accounts and guaranteed IPO allotments

Fraudsters sometimes offer supposedly exclusive institutional trading accounts, foreign institutional or FPI accounts, institutional discounts, guaranteed IPO allotments or access to investments that ordinary brokers cannot provide. They impersonate financial institutions, point investors at counterfeit applications, and ask for money to be sent to a third party account.

An institutional-sounding label grants no special trading rights to an individual. An IPO application must follow the official issue process, including the applicable ASBA or UPI payment mechanism. Allotment is decided through the prescribed basis of allotment, and allotted shares are credited to the investor’s demat account. Nobody can legitimately guarantee an allotment in advance. Verify the institution, the platform and the arrangement independently, and never send subscription money to an account that is not the one named in the offer documents.

Pump and dump

A pump and dump is when promoters or others artificially hype a stock through social media, groups or messages to push up its price, then sell their holdings as others buy. The price falls sharply after the sellers exit, leaving late buyers with losses.

Be wary of stocks you have never heard of being pushed aggressively, claims of “sure shot” or “multibagger” with a deadline to buy, and screenshots of profits that cannot be verified against exchange data. Losses here can happen through perfectly ordinary trades on a recognised exchange, which is why the definition of a scam cannot stop at “someone took your money”.

Dabba trading

Dabba trading means placing trades outside any recognised stock exchange. The dabba operator matches or settles trades internally, not through exchange systems. Such trades offer no investor protection, no exchange grievance redressal and no access to the Investor Protection Fund. SEBI and the exchanges have repeatedly warned against dabba trading. If a platform asks you to trade outside your broker’s official app or website, do not do it.

Unlisted shares on unauthorised platforms

In June 2026, SEBI cautioned investors about electronic platforms and websites facilitating transactions in the securities of unlisted public limited companies. Only recognised stock exchanges are authorised to provide a platform for raising funds or trading in securities, and deals on unauthorised platforms carry no exchange or SEBI investor protection, no settlement guarantee and no route to the investor grievance system.

That warning is about unauthorised platforms, not about every off-market transfer. A private transfer of unlisted shares is not automatically illegal merely because it happens outside a stock exchange. What makes it lawful is the legal basis for the transfer, the seller’s title, any transfer restriction in the company’s articles, and proper settlement and documentation. What you do not get from an unapproved website is the protection a recognised exchange provides. Verify the company’s filings, the seller’s holding and the paperwork before paying anything, and do not share sensitive personal details on such a site.

Fake SEBI notices and STT demands

In February 2026, SEBI warned of forged notices on fake SEBI letterhead demanding payment of Securities Transaction Tax or other dues. STT is levied on transactions executed on stock exchanges and is collected by your broker. SEBI does not issue notices asking you to pay STT directly, and does not coordinate with the RBI to collect it.

Official SEBI emails end in @sebi.gov.in. Online payments to SEBI are made only through the official portal at siportal.sebi.gov.in. If you receive such a notice, do not pay, do not click the links, and verify through official channels.

Unauthorised forex and trading platforms

The Reserve Bank of India maintains an Alert List of entities that are neither authorised to deal in foreign exchange under the Foreign Exchange Management Act, 1999 nor authorised as Electronic Trading Platforms under the RBI’s Electronic Trading Platforms Directions, 2025. The list is updated periodically and carries its own caution: it is not exhaustive, and an entity that does not appear on it should not be assumed to be authorised.

Two things are worth separating here. The Directions set the framework for who may operate an electronic trading platform, and the Alert List is a published notice naming entities that RBI states are not authorised. A name on the list is a notice that the entity is not authorised on either count. A name not on the list has not been listed at all, so absence tells you nothing. If you want to deal with a platform, confirm its authorisation directly rather than reading the list as a clean bill of health. Trading on an unauthorised forex platform is risky and may itself be contrary to applicable rules.

Fake apps, cloned broker sites and account misuse

Fraudsters create lookalike apps and websites of brokers, send fake login pages, or ask for your OTP, UPI PIN, device access or trading credentials. They also lure people with offers to “rent” a demat or trading account, or to take a “trading job” where you trade with someone else’s money. Renting or sharing your account is illegal and can make you complicit in money laundering.

Never share your login details, OTPs, UPI PIN or card details, and do not allow remote access to your device. Download apps only from your broker’s official website or an official app store, and check the publisher’s name rather than the icon.

Fake trading profits and withdrawal traps

Some fraudulent apps show a convincing trading dashboard: positions, charts, a growing balance and a history of profitable trades. None of it corresponds to a trade on any exchange. The app is a display, and the money went to an account the operator controls.

The operating model is usually the same. A small withdrawal is allowed at first, so the victim believes the balance is real and tells others. A larger deposit follows. Then withdrawals are blocked, and the demand arrives for tax, verification, margin, “SEBI charges” or a release fee to unlock the balance. Each payment produces another reason.

A displayed balance or profit is not proof that a genuine exchange trade occurred. Verify independently through your broker and relevant market records, as explained in the verification checklist below. Never send additional money to unlock an alleged balance.

Deepfake videos and impersonation

Manipulated video, synthetic voice and fabricated interviews are now cheap to produce. A convincing clip of a well known investor, a regulator or a company executive recommending a stock, a platform or a “limited” scheme can be assembled without that person ever saying it.

Treat the identity of the speaker as unverified, however familiar the face. Check the recommendation against the person’s or the institution’s own official channels, and remember that a video endorsement is not a registration, a prospectus or a research report. The same caution applies to cloned social media profiles, which copy a real account’s name, photograph and posting history.

Fake algo-trading software and automated-profit schemes

A trading bot, a software subscription or an algorithm does not guarantee returns. Fraudsters advertise supposedly risk free automated systems, then ask for your trading credentials, an API key with trading permission, or remote access to a machine logged into your account. Once they have it, the account can be used for transactions you never authorised, including trades in illiquid options that transfer your money to a counterparty.

Before connecting any third-party software, verify who provides it, read what permissions it asks for, and understand that an API key or token that can place orders is as sensitive as your password. Use only your broker’s supported authorisation route, keep withdrawal and fund-transfer permission off any third-party connection, and never disclose a password or OTP to a software vendor.

IPO and KYC phishing

Messages claiming you have won an IPO allotment, asking for a fee to secure it, or demanding a KYC update through a link in an SMS or WhatsApp message are common phishing attempts. These messages carry malicious links to fake allotment pages or fraudulent payment requests designed to steal credentials or money.

Genuine allotments and refunds run through the processes managed by your broker or the registrar. A KYC update is done through your intermediary, not through a link sent by an unknown number. Do not pay fees for an allotment and do not enter details on unsolicited links.

Red flags to watch for

How to verify before you invest

  1. Check registration. Verify intermediaries at SEBI Intermediaries. For investment advice and research, check the relevant register, because advice for consideration and research reports each require a registration of their own.
  2. Check the payment destination. SEBI’s SEBI Check verifies the “validated UPI handles” (ending @valid) of SEBI-registered investor-facing intermediaries, and checks account details for safer NEFT and RTGS transfers. It is also reachable through the Saarthi app. Confirm the intermediary’s legal name independently before paying, and remember that a verified payee makes impersonation harder but says nothing about returns or suitability.
  3. Use official apps and sites. Download from your broker’s own website or an official app store, and check the publisher.
  4. Ignore unsolicited tips. Treat unsolicited calls, messages and group invites as suspicious, especially where a fee or a transfer is involved.
  5. Check the right regulator. For a forex platform, verify RBI authorisation and consult the RBI Alert List, remembering that absence from the list does not establish authorisation. For a securities-market intermediary, verify registration through SEBI and the relevant exchange.
  6. Verify a trade, not a screenshot. Exchange-executed trades should appear in your broker’s contract notes and in the relevant exchange’s trade records. Shares held in demat form should appear in your NSDL or CDSL account statements. Open futures and options positions should be checked in your broker’s verified position and contract records. A P&L screenshot inside an unfamiliar app is not evidence that a real exchange transaction happened.

Our lesson on SEBI and investor protection sets out what SEBI does and does not regulate, and where your securities and cash actually sit.

What to do if you are scammed

Different complaints belong to different authorities. Reporting through one channel does not automatically initiate action through another.

Fraudulent payments or stolen money: Follow the emergency reporting steps at the beginning of this article. The banking and cybercrime systems are the appropriate starting points for urgent protective action and possible recovery.

Grievance against a SEBI-registered intermediary: First contact the intermediary through its official grievance mechanism. If the matter remains unresolved and falls within SCORES jurisdiction, lodge a complaint through SEBI SCORES.

Suspected securities-market misconduct or an unregistered operator: Submit relevant information through SEBI’s Market Intelligence portal. SCORES is not the general reporting channel for unregistered or unregulated activity.

Keep your evidence and relevant complaint reference numbers for subsequent follow-up.

The single most important rule

Verify the intermediary, the platform, the payment destination and the transaction independently. Never rely solely on screenshots, testimonials or promises of returns. When fraud is suspected, act promptly through the appropriate reporting channel.