Beware of stock-market scams !!!

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Investors invest in stocks are that they provide the highest potential returns than the other options. But like someone once said, “Stock markets are the toughest place in the world to make easy money in the long run” This sentence is remembered when someone has loses his money However he gets carried away to fraudster with the hope of recovering the loses. Below are the types of frauds that are being run in the market.

 Tip and recommendation plan for guaranteed income:

Some fraudster claims through social media like Facebook, WhatsUp messages, SMS that they can help to recover the losses in share market and gives a guarantee of income provided they should buy their different paid advisory service plans. They will quote you two type’s plans like a basic plan and an advanced plan.

Naturally, the person who loses his money will prefer to with basic plan. Once you hire their paid service they will give the recommendation of stock to invest without carrying out any research. Once you buy the recommended stock you will realize that the stock has not given the return but you lost money, So you will be called to the adviser but they have the answer ready that “ I have already told you that you should buy this advance type service but you didn’t listen., so if you want to recover the losses you go for this option” So again you get trapped in his advice and again same story get repeated but when you try to call him you will never lift the phone instead he will block your number.

But some investors are smart they will ask for free trial service, so what fraudster used another trick like they will choose to say around 100 persons and divide into two groups, what they will do that they will recommend the stock such a way that for first group, they will tell that the stock will rise to a certain amount

But this is not the case for all advisers, as some advisers are qualified, registered with authorized institutes like SEBI in India. But they won’t offer free service and even they won’t quote guaranteed income.

Operating of an Individual’s account.

Some fraud advisers search for very busy people that they don’t have time but are get lured easily for earning money easily. For such a person’s fraudster lure for investing in trading options and convince them that they will operate the account on behalf of them and they will earn income guaranteed as they have their expert team. And they will ask for user id and password. But what they will do that they will purchase the non-genuine stock at higher prices and sell them at a lower price. They will siphon off money from your account to the other account.

But what you will feel that you lose the money in the stock market but this is not the case they are intentionally transferring the money into another account.

Apart from the loss, you are now also exposed to regulatory action. Any such trading activity in your account would be looked upon by the income tax department as money laundering (creating losses to avoid taxes or convert white to black money or vice versa). SEBI considers such trades circular trading. Apart from the monetary penalty that such trades entail, you could potentially be banned for life from the markets by SEBI.

For the above reason, the Finance Minister has imposed a tax of 10% on equity as LTCG (Holding the equity more than a year)

PUMP and Dump Strategy:

This is carried out for penny stocks (The penny stocks means whose value is very low like One to Two rupees). The penny stock liquidity is very low like nothing. In such type of company the promoters, fraudsters along with operators make some strategy like they will buy a large number of shares from the market at a very low price and make the artificial scarcity of shares in the market. And after purchasing a large number of shares send positive messages text messages to investors in forums like promoters are buying the stocks, Company has acquired a huge contract from some other company, any well-established company is going to buy some stakes in the company. So by reading these messages in forums, text emails, some beginner’s get attracted into this fraud and them will

What precaution you should take?

·         Never entertain tips and recommendations.

·         Learn stock market strategy or working style then only invest after your analysis.

·         Do not share your credentials like user id or password. to anybody

·         Do not allow to operate your account on your behalf.

·         Do not believe blindly.

·         Even if you get the tips or recommendation and if you tempted to go ahead please confirm the authenticity of the provider.

·         Do not invest in penny stock.

Conclusion: if we listen to Buffett never lose money never lose money never lose money then it's simple if you see something fishy you simply avoid it buying a stock is like buying a second-hand car you see a car and then you have to start researching asking the question of what is odd with the car what doesn't work so that you don't buy something wrong and avoid losing money