SCAMS THAT RATTLE THE INDIAN STOCK MARKET
Many Indians have begun to invest in securities of business enterprises and companies, with the aim of making profit. Investing in securities such as stocks, bonds, future etc is good as one can get to make a living from it. However, there are times when investing in such securities can go all wrong. An example is the case stock exchange scam. There are various scams in the Indian stock market that has led various investors to lose their money. Most of these scams are common, yet people still fall prey to them. Some of these scams that rattle the Indian stock market include:
- Tips and recommendation fraud: This is a very common scam that rattles the Indian stock market. Fraudsters try to attract investors and traders by convincing them that they are able to provide profit of up to 10% per day and 40% per month. Furthermore, they assure investors that they would provide more than 90% accuracy on tips and recommendation. One should take note that is it quite infeasible for profit of 40% to be made in a month constantly. Even Warren Buffet that was a legendary investor only had 22% profit in a year and was still among the richest persons in the world.
The fraudsters also claim that they have provided at least 40% return to their previous clients. When investors demand for trial tips before they subscribe to the tips and recommendation program, they agree to it easily. Most people that try out the trials usually fall victims of the fraudsters. It should be noted that the trial tips provided the fraudsters are usually accurate. This is to win the assurance of the victims, hence making them susceptible to their ploy. Victims would later pay high amount of money for the tips and recommendation and later receive tips that work nothing.
- Pump and dump: This is a kind of fraud whereby fraudsters try to increase the price of micro cap stocks by feeding investors and traders with wrong information. By feeding investors with fake news, they try to inflate the price of the stocks. The fraudsters would purchase cheap penny stock in large volumes. Afterwards, they would send misleading messages to various investors recommending them to purchase the stocks. People begin to buy the stocks and because of the high demand of the stocks, the price of the stocks would increase. When the price of the shares has gotten to a good price, the fraudsters would sell their stocks and make good money.
The fraudsters would stop sending misleading messages after they have sold their stocks at high prices.
- Fake message in the name of brokers: Many investors in India invest on stocks upon the advice and recommendations of brokers. Most investors do not make research on the stocks as they blindly believe every recommendation given to them. Fraudsters realize this and send recommendations as brokers to people, telling them to purchase a particular stock. Due to the fact that the recommendation is false, stock prices would begin to fall and investors would lose money.
Why do fraudsters send the fake messages?
Before hand, the fraudsters would send recommendations to their paid subscribers purchase the same stock. Then they would try to increase the prices of stocks by sending misleading messages as brokers. When the price of stock begins to increase, they would suggest to their paid subscribers to sell their stocks and receive good returns. The paid subscribers would be satisfied with the recommendation and continue with the subscription. In the end, retail investors would lose their money for following the fake recommendations.
Take care and spread a word.