Sebi busts SMS, WhatsApp-based investment scam | business | Hindustan Times
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Sebi busts SMS, WhatsApp-based investment scam

business Updated: Jun 05, 2014 21:46 IST

Capital markets regulator Sebi on Thursday cracked whip on a scam wherein 'trading tips' were being offered through mobile SMSs and WhatsApp messages by unregistered investment advisors while promising guaranteed returns of as much as 200%.

In an interim order passed on Thursday, Sebi asked two individuals -- Mansoor Rafiq Khanda and Firoz Rafiq Khanda -- as also their associated companies to cease and desist from acting as an investment advisors and not to solicit or undertake such activities or any other unregistered activity in the securities market.

They have also been asked to immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, websites, etc in relation to their investment advisory or any unregistered activity in the securities market.

At the same time, Sebi has also cautioned "investors to take their informed investment decisions without being influenced by such messages and advices and to deal with only intermediaries registered with Sebi".

Sebi had begun its probe after receipt of complaints that certain entities were offering trading tips through Short Message Services (SMSs) and WhatsApp sent from five distinct mobile numbers, as also some websites.

In these messages, the investors were being promised 200% assured returns on deposit payments of Rs 25,000, along with promise for trading tips.

The messages also promised monthly gains of Rs 25-50 lakh.

Based on the complaint, Sebi undertook a preliminary examination by making telephone calls to the concerned mobile numbers and were directed to make necessary payments through a website.

Sebi said that the modus operandi involved sending SMSs to to investors with inducing claims and citing references to the website addresses, inviting prospective investors to enroll with them for their investment advisory services for a registration fee; followed by the registered clients being provided trading tips on "consideration/profit sharing" basis.

Sebi then gathered details about the entities running the scheme after contacting the banks, whose details were gathered from the SMSs and the websites, after which the regulator zeroed on two Surat residents -- Mansoor Rafiq Khanda and Firoz Rafiq Khanda.

The regulator said that prima facie it appears that the entities have been acting as Investment Advisors without necessary regulator approvals and they were dealing in securities in a manner detrimental to the interest of the securities market and they were associated with the securities market in violation of the provisions of the Securities Laws.

"A detailed investigation may bring to light the depth of such activities that are carried out by these entities and the extent of losses caused to investors," the regulator said.

Sebi further observed that the modus operandi as well as names of the operators in the instant case are similar to the case of Imtiyaz Hanif Khanda and Vali Mamad Habib Ghaniwala, in which case the regulator had passed restraint orders in August 2013 and December 2013.

The regulator said it would further investigate to find out connection, if any, between these two sets of entities.