Sebi busts SMS scam, warns against unsolicited stock tips

The messages being circulated included promises of Rs 5,000-75,000 daily earnings in ‘equity and MCX’ market through intra-day tips and investors were asked to call on the given numbers for ‘sure shot call’

Using its newly-granted powers to access call data records and conduct surprise visits, capital markets watchdog Sebi has unearthed a large-scale SMS scam wherein fraudsters were luring gullible investors with promise of daily returns of up to Rs 75,000 through mobile messages.

As an interim measure, Sebi has restrained two individuals and four entities associated with them from direct or indirect dealings in securities markets till further direction, while they have also been asked to cease and desist from acting as investment advisors and portfolio managers.

Besides, they have also been asked to immediately withdraw and remove all their advertisements, representations, websites and other materials in relation to their advisory services.

Sebi swung into action last month after it noticed that certain entities were offering intra-day tips and stock advisory services through Short Message Services (SMSs) via mobile phones.

The messages being circulated by them included promises of Rs 5,000-75,000 daily earnings in "equity and MCX market with our confirm intraday tips" and the investors were asked to call on given numbers for "sure shot call".

Sebi began its investigation and obtained details of the call data records of the telephone numbers used for sending such SMSs. Later, it conducted a surprise visit on the premises of one Imtiyaz Hanif Khanda and his maternal uncle Vali Mamad Habib Ghaniwala.

This is the first major case where Sebi has used its newly granted powers to access call data records of suspected persons.

Sebi said its investigations prima-facie found that the said persons through their proprietary concerns, Right Trade, Sai Traders, Bull Trader and Laxmi Traders, were providing unauthorised investment advice.

Besides, Right Trade was also soliciting business of portfolio management services from the general public without being registered as a portfolio manager.

The entities had also made misrepresentations by making unrealistic claims, false statements such as having office in various countries, FII based calls, jackpot calls, etc.

"They also made representation in reckless and careless manner in their messages and website suggesting facts which are not true," Sebi said. Sebi said the entities "were engaged in providing intraday tips for a consideration/profit sharing under a plan under which trading tips are provided after depositing registration fees into account of the entity as an advance."

They were also promising 'jackpot' calls in global markets through different plans, including a monthly package of USD 300 per month and a ' pay per call' 30 per cent profit sharing scheme. The investors were given details of bank accounts for depositing the money.

Sebi sought details of these bank accounts from the concerned bank and found that all the accounts were at the same branch of ICICI Bank in Surat, Gujarat. It was found that most of the transactions in all these accounts were cash deposits from various parts of the country, which cash was being withdrawn through ATMs.

The bank account details revealed that Right Trade and Sai Traders had common address, while Bull Trader and Laxmi Traders also shared their address. The mobile phone numbers given in the SMSs containing investment tips were also found to be in the names of related entities, including those of staff and relatives.