A promise of quick profits can turn into an expensive lesson for stock market investors. Zerodha co-founder Nithin Kamath has warned investors against blindly following stock tips circulating on WhatsApp, Telegram, SMS and social media, after the Enforcement Directorate (ED) reportedly froze trading accounts holding around ₹200 crore in an alleged pump-and-dump operation involving two listed companies.
In a post on X on October 20, Kamath cautioned that such schemes could become more frequent as the market cycle progresses. He also flagged the growing influence of social media personalities promoting stocks and IPOs, warning that investors chasing seemingly easy money could face significant losses.
Why Nithin Kamath believes WhatsApp stock tip scams could increase
Kamath’s warning centres on the persistence of stock market scams despite the widespread availability of financial information and digital tools. He said investors continue to fall for tips shared through messaging platforms and social media, often without checking the credibility of the person making the recommendation or understanding the risks involved.
“It’s crazy that even in 2026, people still fall for stock tips on WhatsApp, Telegram, SMS, and social media. This is probably the silliest way to lose money,” Kamath wrote.
He also warned that the frequency of such schemes could rise as the market cycle advances. According to him, pump-and-dump activity is already appearing through WhatsApp groups and social media influencers promoting stocks and IPOs.
“Given how late in the cycle we are, these instances are only going to increase. We’re already seeing more pump and dumps, whether through WhatsApp groups or influencers peddling IPOs and stocks. This won’t end well,” he said.
In a typical pump-and-dump scheme, promoters attempt to create artificial excitement around a stock to attract buyers and push up its price. Those behind the promotion may then sell their holdings at inflated prices, leaving investors who entered later exposed to sharp losses. The ED action mentioned by Kamath concerns an alleged scheme; the allegations should not be treated as proven wrongdoing.
His warning also draws attention to the risks of recommendations that exploit investor enthusiasm around popular stocks, upcoming IPOs or claims of inside knowledge. Investors may be particularly vulnerable when messages create urgency or suggest that an opportunity will disappear unless they act immediately.
How investors can avoid stock market pump-and-dump traps
Kamath suggested that investors use AI tools such as ChatGPT and Claude to question suspicious investment messages before committing money. Such tools can help identify warning signs, explain unfamiliar financial terms and suggest questions to investigate, although their responses should not replace independent verification.
“So the next time you get a message promising easy money, just ask Claude or ChatGPT whether it’s a good idea. It could save you a lot of money,” he wrote.
Investors should independently check a company’s disclosures, financial performance, exchange filings and any claims made in a stock tip. They should also be wary of guaranteed-return promises, pressure to buy immediately, anonymous groups promoting obscure stocks and influencers who do not clearly disclose potential conflicts of interest.
Kamath’s broader message is that the lure of easy money can cloud investment judgment. In his view, stock market participants should be especially cautious when a tip promises unusually high returns with little or no risk.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
