‘Epidemic’ of online share trading frauds: In 2 months, 110 people in Pune lose Rs 18 crore

*42-year-old private firm manager attended online sessions by ‘stock market guru’ before investing and lost Rs 1.62 crore.

*A 65-year-old retired bank manager was added to a group named ‘Dalal Street Champions’ and later ended up losing Rs 90 lakh from life savings.

Online training by ‘experts’ on advanced lessons in share trading, phone-based app for constant monitoring of investment and a promise of a prosperous future. These were some of the baits used by cyber criminals to defraud victims from Pune in what the investigators are calling an ‘epidemic’ of online trading scams seen in the last two months with 110 people losing a staggering Rs 18 crore.

Probe has revealed that cyber criminals have misused names of several wealth management entities and Indian as well as foreign portfolio investors to entice victims.

Officials from the Cyber Crime police station of Pune said that the wave of cases reported in ‘task frauds’ and ‘drugs in courier’ scams seem to be subsiding. As many as 40 cases of online share trading scams were reported last year. The present year has seen a massive surge with 49 and 61 cases being reported in January and February in which victims lost Rs 7.6 crore and 10.9 crore respectively. The cases in March have seen a further upward trend.

Explaining the modus operandi, an officer from the cyber crime cell said that cyber criminals fish for potential targets through social media posts or phone messenger texts. Those who respond are added to online groups where they are offered online lessons and are asked to log-in on certain share trading applications designed by the cyber criminals.

“These applications have intriguing and technical-sounding names to make them seem authentic and fraudsters also misuse many big names in the wealth management sector claiming affiliations. As victims start sending money to fraudulent accounts, the fake apps start deceitfully displaying unrealistically high returns, luring victims into further investing substantial amounts. The fraudulent apps often mimic legitimate trading platforms, creating a false sense of security even reflecting ups and down in the market. When victims try to withdraw their earnings, fraudsters vanish. Most of these communications happen in chats and the expert sessions happen through videos and sometimes even live videos. The surge in cases that we have seen is nothing less than an epidemic.”

Regarding the trend, Senior Inspector Minal Patil, in-charge of the Pune Cyber Crime police station said, “We have observed that most of these victims were already investing in shares through various other legitimate trading platforms. These fraudulent platforms promised very high returns, offered training sessions and assurance of a prosperous future. Victims have been cheated for amounts in the range of Rs 5 lakh to Rs 3.95 crore. Most of these victims have taken out their investments in legitimate trading formats and put them in these fraudulent ones. We have launched a coordinated probe in this series of cases.”

In an advisory issued in this regard on February 26, the Securities and Exchange Board of India (SEBI) stated that fraudsters were enticing victims through online trading courses, seminars, and mentorship programmes in the stock market, leveraging social media platforms like WhatsApp or Telegram, as well as live broadcasts.

“Posing as employees or affiliates of SEBI-registered Foreign Portfolio Investors, they coax individuals into downloading applications that purportedly allow them to purchase shares, subscribe to IPOs, and enjoy “Institutional account benefits”—all without the need for an official trading or Demat account. These operations often use mobile numbers registered under false names to orchestrate their schemes,” SEBI said.