‘Spot a scam, guard against dubious finfluencers’

Over 1 lakh unlawful contents were removed from social media platforms in the last 18 months, Sebi Chairman Tuhin Kanta Pandey said

Tuhin Kanta Pandey, chairman of the Securities and Exchange Board of India (Sebi), on Friday alerted retail investors about rising frauds and scams in the securities market.

“A smart investor relies on credible, verified sources, and ignores unsolicited offers on social media. While digital infrastructure has brought the markets to our fingertips, it has also armed fraudsters with new tools to deceive investors.

“Unsolicited messages on messaging applications, dubious “finfluencers’, and fake trading apps/websites promise the one thing that markets can never offer-Guaranteed Returns,” Tuhin Kanta Pandey told the World Investor Week 2025, a global campaign by IOSCO to highlight the importance of investor education and protection at NSE.

This is a challenging proposition for a nation where nearly 80% of households are fundamentally risk-averse and prioritize capital preservation. Fraudsters exploit this by creating a false sense of security, luring cautious savers into high-risk schemes disguised as safe investments.

A survey conducted by the capital markets regulator confirms that the key barriers preventing investment are lack of knowledge, trust deficit, and fear of losing their capital. As the legendary investor Benjamin Graham said, “The investor’s chief problem-and even his worst enemy-is likely to be himself”.

Fraudsters prey on this human tendency, eroding not just an individual’s hard-earned savings but also their trust. “When trust is broken, the engine of our economy falters. People are reluctant to invest, savings remain unproductive, and cost of capital rises. For a developing nation like India, protecting this trust is paramount,” Pandey underlined. The securities markets, Pandey said, are the engines of India’s growth, and it is “our shared responsibility to ensure this engine runs on strong foundations of integrity and transparency.”

A key part of responsible investing is to encourage investors to reflect on their financial goals. Individuals must examine whether they seek to build long-term wealth or want to engage in speculative, short-term trading. Sebi studies have consistently shown that retail investors trading in derivatives end up facing losses, often because they do not fully understand the risk in these products. Derivatives are meant for hedging and risk management, not for quick gains. Retail investors should therefore assess their risk capacity, learn how these contracts work, and avoid speculative trades,” Sebi chief added.

The investor survey conducted by Sebi, covering over 90,000 households shows that 22% of non-investors who are aware of securities products intend to invest within the next year.