02 March,2025 07:50 AM IST | Mumbai | Faizan Khan
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Sagar Nikam (name changed), a 35-year-old resident of Andheri who works with a private firm, was at home on September 22 last year when he got added by someone he didn't know to a WhatsApp group called M1 Market Strategy Analysis Base.
Unaware of the modus operandi of cyber-scammers, Nikam did not leave the group, which at that time had 137 members. The group's admin, one Ishani Mehta, kept posting investment advice. As Nikam was interested in investing in the stock market, which was doing well at that time, he remained in the group and kept an eye on the tips that Mehta sent out regularly.
Group members shared screenshots that showed them getting benefits, so he acted on some of the advice and invested in those stocks using his own trading app, and made profits as well. However, the members were using other apps suggested by the group admins.
Nikam chatted with Mehta over several days about investing his savings in the stocks recommended in the group. She told him that she worked with Religare Broking Ltd (RBL), and Nikam was convinced enough to start investing through an app that Mehta recommended.
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He was told that stock tips would be shared late in the evening, and he would see profits on these stocks in the morning. Cautious at first, he began investing Rs 10,000, and gradually increased it to Rs 10 lakh and above. In two months, he had carried out 28 transactions totalling R77.8 lakh, and had received R1.7 crore.
Now, Nikam wanted to withdraw his invested amount and continue trading with the profit amount, but could not do so. Mehta told him to withdraw after a few days to avoid huge taxes. Nikam waited for 15 days and again asked Mehta about withdrawal, but he felt uneasy about the replies he got. He contacted Religare Broking Ltd using details from their website, and this is when he learnt he had been duped, as there was no such investment offer or app from RBL.
Nikam called the cyber helpline number, 1930, and reported the crime. An FIR was registered by the Mumbai Police cyber cell on January 4 this year. A similar case was reported by 53-year-old Andheri resident Uday Sharma (name changed), who was approached via WhatsApp with an offer of stock market investment guidance with promises of high returns. With the same modus operandi, the scammers convinced him to transfer R5.70 crore in over 20 transactions. When he attempted to withdraw funds he was asked to pay additional fees, which is when he got suspicious and lodged a complaint. Aside from the targets most of the members in these groups are part of the syndicate, setting the stage with messages about their market winnings.
Stock market scammers are increasingly using social media platforms like Instagram and Facebook to lure victims. Fraudsters share investment-related videos and even employ Deepfake technology, creating fake videos of prominent businessmen, well-known stock advisors, and business journalists endorsing fraudulent firms, making the scams appear more credible.
Ritesh Bhatia, founder of cybersecurity firm V4WEB, says social media influencers lend credibility to fraudulent schemes by promoting them, sometimes unknowingly.
1 Victims are added to WhatsApp groups through Facebook, Instagram or other social media.
2 Fraudsters conduct online classes on stocks and IPO investments to build trust.
3 Victims are encouraged to download trading apps.
4 Victims are asked to make initial payments or add money to their accounts.
5 Once money is added, fraudsters freeze the funds, preventing access.
6 Victims are left trapped with no recourse to retrieve money.
The five specialised cyber cells of the Mumbai Crime Branch, which investigate cyber fraud cases involving amounts above R10 lakh, have found that most of these scams are operated from foreign locations.
Dubai has emerged as a hub for stock market frauds, primarily run by Chinese nationals, with links also traced to Cambodia, Hong Kong and China. However, there is no clear estimate of how many such groups might be operating.
The stolen money is transferred through multiple bank accounts, making it difficult to track. "By the time we track one account, the funds have already been moved to another. Additionally, the slow response time from bank nodal officers further benefits cybercriminals," a cyber cell officer explained.
Typically, fraudsters use 20-25 accounts to launder money from a single case before converting it into cryptocurrency, which is extremely difficult to track or recover.
As cybersecurity expert Ritesh Bhatia says, "The role of financial intermediaries is equally concerning, as banks fail to efficiently monitor mule accounts used for laundering scam proceeds, and often delay responding to law enforcement requests."
Mumbai Police recently arrested eight accused who were illegally activating SIM cards without proper KYC documentation and selling them to shop owners for a commission. Investigators uncovered around 30,000 such SIM cards which were used for fraudulent activities, including stock market scams. Telecom company employees were found colluding with the gang, illegally porting numbers. Moreover, most of the accounts used for collecting the targets' funds were created without proper KYC in connivance with bank employees.
Crime Branch Deputy Commissioner of Police Datta Nalawade says, "Never download random trading apps recommended by unknown individuals. Trading should only be done through Reserve Bank of India-approved apps, a list of which is available on the RBI website." However, cybersecurity expert Ritesh Bhatia says, "While digital awareness is important, the government cannot simply shift the blame onto users. There is an urgent need for stricter accountability on tech platforms, proactive banking interventions, and robust enforcement mechanisms."
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Nalawade adds, "If you are added to WhatsApp or Telegram groups by an unknown person promoting investment tips, do not engage. Exit the group immediately and report it to the respective platform as a potential scam, reach out to your local police station, or contact the cyber helpline at 1930. Once you start reading and responding to their messages, you enter the first stage of the fraud."
Though no specific data is available on stock market fraud scams, the targets appear to be widespread. Multiple FIRs suggest that senior citizens - especially retirees with savings looking to generate income - are among the primary targets. Young working professionals and businesspersons have also fallen victim.
According to Mumbai Police data, reported by mid-day last year, cyber fraud in the city surpassed Rs 1000 crore between January and November 2024. Of this, over Rs 300 crore was linked to stock market investment fraud, making it the most significant category of cybercrime in Mumbai.
Between January and October, the Mumbai Police Cyber Cell registered 755 cases of stock market investment fraud. Out of these, 124 cases were solved, and 147 individuals were arrested. The total fraud amount stood at Rs 366 crore but the police could recover only Rs 27 crore - just 7.51 per cent of the total loss.
These figures represent cases reported to the Mumbai Cyber Cell where the loss exceeded R10 lakh. Cases involving lower amounts are handled by local police stations.
In 2021, 12 cases of investment fraud were reported and seven detected, with 22 accused arrested. The amount involved was R2.57 crore.
In 2022, 11 such cases were reported and three detected. The amount involved was R4.4 crore.
In 2023, 33 cases of investment fraud were recorded, involving an amount of R10.6 crore.
Datta Nalawade, Deputy Commissioner of Police, Crime Branch says, "Stock market investment scams is a rising trend, and in 2024 alone, hundreds of cases have been reported."
