Zerodha chief warns investors of rising stock-tip scams on messaging apps

Zerodha co-founder Nithin Kamath has warned investors against following stock tips shared on WhatsApp, Telegram, SMS and social media. His warning follows a recent action by the Enforcement Directorate, which reportedly froze trading accounts holding around two hundred crore rupees in an alleged pump-and-dump scheme involving two listed companies. Kamath stated on October twenty on X that such fraudulent schemes are likely to increase as the current market cycle moves forward. He also pointed out the rising role of social media influencers who promote specific stocks and initial public offerings, cautioning that people chasing fast profits often end up facing heavy financial losses. In a typical pump-and-dump operation, fraudsters artificially drive up a stock price to attract buyers. The creators of the scheme then sell their own shares at high rates, leaving late-entry investors with severe losses.

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Pump-and-dump scams rely on hype and false urgency to trick retail investors into buying obscure or overvalued stocks before the manipulators cash out. Financial regulators regularly advise the public to check official company disclosures and exchange filings rather than relying on unverified messages from unknown groups or online influencers.