With time, Despite DND being in force almost every stock market trader/investor is receiving phone calls and sms particularly from Indore or Madhya Pradesh, Gujarat and Rajasthan among other places to register for free trial in their stock market advisory.
Forget being registered with SEBI these guys don't even have a website or a company name.
This is a huge scam that is going on and today we are going to expose their modus operandi.
First of all, The scamsters purchase a "DATABASE" of demat and trading account holders, Let us say they purchased a huge database of account holders and out of that 25 thousand are active traders.
They will now contact the traders, Say out of 25 thousand 50% of them are not interested but the remaining 50% are interested in the trial since it is free.
As a result of it they will be getting a Hot Tip on some stock that is going to report its results on the day as decided by the Tip Provider and it will be a proper call with SL and Target.
Now they will either be holding a Reseller Account or a normal account in Bulk Sms Provider services and they are ready to send the trial... For example yesterday Larsen & Toubro came out with numbers and it has a habit of reacting 3-5% on the results day.
What these scamsters will do now is very interesting, They will make a 50:50 list out of the 12500 people who registered for the trial.
The first 6250 people will receive a Buy Call in L&T Futures or even cash with a stop-loss and target and the next 6250 people will receive a Sell Call with stop-loss and target.
Before giving the call, They will compel you to trade on it so that you can join the service, and they will claim to have inside info about the results.
The results of Larsen & Toubro will be declared and the stock will react either way, Like it fell yesterday they will start calling up people who got the sell call and ask them to join their paid services since they gave the Super Hit Trial. The charges will range from anything like 25 thousand per month to per year depending on the greed of the scamsters.
They will now keep repeating the phone calls and win your trust that they are the best in class and they will give the bestest of calls which will make you filthy rich.
Sadly, almost 50% will fall for it but lets assume only 30% people or 1875 people to be precise fall for the scam, A total of 1875*25000 = 4,68,75,000.00 almost 5 Crores will be netted by these scamsters.
Their investment was of only about 40,000 (20,000 for database, 10,000 for sms service, 10,000 for call center type hired staff)
They will simply switch off the phone from which they talked with the people who got the Buy Call.
People who paid Rs 25,000 will also not get any call from their side and the phone number will be switched off.
The traders who bought L&T cannot take any action because they didn't pay them a penny and got a free tip.
The people who paid 25,000 for paid services will not take any action because they would have got a SMS from the same number which had the terms of Profit Sharing out of the call and some might even have traded and earned will think let it be.
They will re-use the database with other names and locations and repeat the same modus operandi and this time might again earn 5 crores with the same database.
It is not wrong to take the trial for Free as long as you just track the movement of the calls but it is very dumb to take a Free Trial and decide to join the Paid Services of an advisory who is not registered with SEBI and is also not having a website for that matter.
Jaago Grahak Jaago, Do not fall prey to such Scamsters and avoid trusting their words.
Note: I am not defaming all advisories and analysts out there, There are some very genuine people and it is easy to make out who is genuine and who is fraud.