SEBI Asks Mutual Funds To Act Against Telegram Channels Conning People by Masquerading as Mutual Funds

Moneylife Digital Team 03 December 2022

In an important move, market regulator Securities and Exchange Board of India (SEBI) has directed mutual funds (MFs) to act against dubious Telegram or social media groups posing as asset managers or associates created to con investors. The capital markets regulator said in a communication to the industry on 30th November, Telegram is full of such dubious groups masquerading as fund houses.

SEBI's warning to the industry comes in the wake of instances where investors have been defrauded by these Telegram group operators, said three MF industry officials. These fake Telegram channels are assuring investors that their money would be doubled in a matter of days, they said. Paytm Doubling Mutual Funds, Paytm Doubling Funds Mutual, Tata Mutual Fund Investment, Close Fund Traders, Unit Tareiders Pvt, Trade Exchange, Bitcoin (Mutual Funds), Tata Mutual Funds Trust, HDFC Mutual Fund Trust Money Doubling are the telegram channels named in the regulator's communiqué to MF industry.

Many of these channels have 50,000-100,000 users each. For instance, the Telegram group by the name Paytm Doubling Mutual Funds has a base of over 90,000 users. Similarly, Tata Mutual Fund Investment has a user base of over 77,000. "These telegram groups may be adopting new methods to defraud the investors by camouflaging as registered mutual funds/associated with Mutual Funds," said SEBI.

MF industry officials said these Telegram channels use logos of the fund houses to make it look authentic. Some of them use the photos of reputed MF officials, including fund managers, in the fake profiles of the administrators of these groups.

Last week, Kotak Mutual Fund had issued a warning to investors regarding the fraudulent Telegram and social media groups and communities that promise steep returns. It said multiple social media entities over Telegram and other social media channels have misused Kotak Mutual Fund's brand name, logo and spokesperson's identity to misguide investors.

Often people are also being swindled on the investment front and jobs. Some fraudulent social media channels pretend to be mutual funds which are looking to recruit. SEBI has asked MFs to constantly watch out for such suspicious Telegram channels.

"The mutual funds shall ensure that all stakeholders such as distributors, brokers, investment advisors etc be sensitised to perform similar due diligence and promptly take appropriate action," SEBI said on 30th November.

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