MC Investigates| Epic Traders: Two entities, same name, same scam

To make its claims more credible, Epic Traders has copied the content of a registered RA, listed that firm's SEBI registration number as its own, and even urged people to deal only with SEBI-registered entities!

Moneycontrol has written to the RA that is being impersonated and will update the article when they respond.

The other Epic Traders which SEBI had investigated and passed an order against on December 17, was also confused with a registered RA with a similar name. The complaint (about Epic Traders disappearing after taking money given for investment), registered through SEBI's online redressal platform SCORES, had identified the culprit as a registered RA with a similar sounding name. But on investigation, the regulator found the RA had nothing to do with the scam and that an unregistered entity was using a similar name to sell investment advice.

Devil's in the details

While this is a serious violation that can result in people losing a lot of money, there is a humorous side to this impersonation too. Scamsters can be extremely lazy with details. For example, the Epic Traders that Moneycontrol found has shared photos of people who it claims is part of its team, but a quick check showed these people have little to do with Indian stock markets. Two of the people presented as analysts seem to be models. A third seems to be a web developer based in Canada; Moneycontrol has written to the web developer too, and the article will be updated if the person responds.

The bank account of this entity, which is where any connection to the real entities/scamsters can be found, is in the name of a Krish Sudanshu in  YES Bank's Meerut branch (a/c number 137600170028632).

Difficulty in recovering money

The difficulty lies in recovering the money from such fraudsters since the same can be transferred out of the bank account linked to these websites before they have been reported and investigated by SEBI, and these entities can simply disappear.

SEBI sent show-cause notices to the two addresses of Epic Traders `available on record' — only one of them was duly delivered. But there was no reply to this, nor to a notice about a hearing, which was returned undelivered with a remark that the recipient was away for a long time and there was no return address or mobile number available.

In such cases, banks have been asked to stop all debits from the accounts, except those meant for issuing refunds to complainants. It is not clear from the SEBI order how much of the money collected is still held in these accounts.

Both instances show why it is essential to contact registered entities only through the contact details that are provided on the regulator's website and the need for the centralised fee-payment mechanism.

Centralised fee-payment mechanism

This fee-payment mechanism, called the Centralised Fee Collection Mechanism for IA and RA (CeFCoM), can ensure that the money goes only to registered entities and not to a bank account operated by a fraudster. A September 13, 2024, SEBI circular said that this mechanism will be operationalised from October 1 and that it would be an optional. The Administration and Supervisory Body (ASB) had been asked to encourage clients and IAs (investment advisors) / RAs to use this mechanism.

As these cases illustrate, without this mechanism, any person/entity can collect fees in the name of a registered RA or IA in a bank account operated by the fraudster. Often even the bank account details do not lead to the fraudsters, who may have opened the accounts in names of unsuspecting people who may have been given a small commission for the use of their accounts.