Public urged to be vigilant as SEC warns of rising stock market scams

Online scams linked to stock market investments are on the rise, prompting the Securities and Exchange Commission (SEC) of Sri Lanka to take several measures to curb fraudulent activity.

Senior Professor Hareendra Dissabandara, Chairman of the SEC, explained that in many cases, individuals falsely claiming to be stockbrokers representing Blue Ocean Securities Ltd approach the public via social media posts or telephone calls.

These scammers promote stock market investments by comparing them favourably against fixed deposits and often boast of successful stock predictions involving leading listed companies to gain trust.

Victims are then persuaded to deposit funds into local bank accounts.

They also use an App.

“However, they later discover that their money was never invested, while the phone numbers used by the scammers become unreachable, leaving victims with limited options other than legal action.”

Professor Dissabandara noted that some scammers also attempt to entice investors into buying specific stocks with the intention of manipulating the market.

He said the SEC has identified several such individuals and, in collaboration with the Criminal Investigation Department (CID), the Central Bank (FIU) and other law enforcement agencies, has initiated legal action against those involved.

“We have even identified two banks into which funds were transferred by victims,” he said.

Advising the public to remain vigilant, Professor Dissabandara stressed that stock market transactions can only be carried out through a Central Depository System (CDS) account. “Remember the golden rule. A third party cannot invest in the stock market on behalf of another person without a CDS account,” he cautioned.

Meanwhile, SEC Deputy Director General Tushara Jayaratne said that Gladius South Asia is another entity linked to similar scams. He explained that callers entice individuals to invest in foreign stock markets, such as Dubai or Singapore, through the company.

“We have identified two bank accounts that received such deposits and have informed the CID Fraud Bureau and the relevant banks to take joint action,” Jayaratne said.