Sebi widens probe into investment scams via SMS, WhatsApp

Two individuals were restrained by the watchdog from acting as investment advisors, who were offering unauthorised 'trading tips' through SMS and WhatsApp

Capital market regulator Sebi has widened its probe into suspected investment scams through mobile SMS and WhatsApp messages, wherein investors are lured into promise of huge returns after initial payments.

Two individuals - Mansoor Rafiq Khanda and Firoz Rafiq Khanda - were on yesterday restrained by the watchdog from acting as investment advisors after they were allegedly found offering unauthorised 'trading tips' through Short Message Service (SMS) and WhatsApp messages via mobile phones.

Sebi has ordered further probe into the scam after it noted that the "modus operandi" of these two individuals 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.

"Considering these facts of the case, it may be appropriate for further investigations to find out connection, if any, between the entities hereinabove (Mansoor and Firoz) and the entities in the orders dated August 20, 2013 and December 30, 2013," the Securities and Exchange Board of India (Sebi) said in an interim order Thursday.

The regulator had begun a preliminary probe involving Mansoor and Firoz after complaints that certain entities were offering trading tips through SMS and WhatsApp sent from five distinct mobile numbers, as also some websites.

In these messages, the investors were being promised 200 per cent 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 the probe by making telephone calls to the concerned mobile numbers and were directed to make necessary payments through a website.

Subsequently, the regulator had zeroed on the two Surat residents -- Mansoor Rafiq Khanda and Firoz Rafiq Khanda -- based on the details gathered of the bank accounts wherein the money was to be deposited by the investors.

According to Sebi, the entities were prima facie acting as Investment Advisors without necessary regulator approvals.

"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.

To safeguard investors interest, Sebi has asked Mansoor and Firoz as also their associated companies to cease and desist from acting as 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, brochures, documents, websites, among others, 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".