One of my readers wrote to me about an online tipster which has an interesting business model.
The promoters of this entity have opened half a dozen companies with some alluring names.If you Google “stock tips”, most of the top listed ranking/sponsored ads will belong to this entity
All the group companies advertise aggressively online using phrases such as “99% accuracy in our stock tips”/”Earn 25000-40000 Rs daily” etc.They charge exorbitant amounts for their stock tips which can range from Rs.10000-Rs25000 per month
An innocent investor/trader gets taken in by these ads and subscribes to one of the companies (say Company A).Now, these packages work in such a manner that if the investor is lucky he will hit the price target else he will hit the stop loss.Either ways, Company A has made its money.
After a while, the investor loses his shirt and stops subscribing to company A’s packages.But he still remains a sucker for stock tips.So again he Googles for “advisory” companies and this time joins Company B (which unknown to him is a related group entity of Company A !!).And then the sad story repeats itself !
Now, these tipsters have adopted an interesting business model.They have approached brokers in tier 2/tier 3 cities and have asked them to recommend their advisory services to their clients.The broker’s commission for doing so?A full 25% of the subscription fees !!
I am amazed that SEBI has not stepped in to stop these kind of schemes which are making bogus claims and duping investors.
Jago SEBI Jago !!