Common Scams in the Unlisted Shares Market and How to Sidestep Them (2026)
Reviewed by Kanishk Dev Bangia, NISM Series XV Certified Research Analyst
Last Updated: May 2026 | Reg. No: NISM-202300182946
In April 2026, SEBI suspended 39 companies linked to an unprecedented unlisted shares fraud in India: RRP Semiconductor, where the unlisted value of shares, according to reports, was increased from ₹15 to ₹10,887, a manipulation over 720 times the original. Those who came late ended up losing the majority of their investments as soon as the scheme unraveled. But the problem is not unique. SEBI simultaneously took action on 193 unlisted securities issuers without following legal provisions, and on unregistered trading platforms such as altGraaf, Tap Invest, and Stable Investments for issuing unlisted debt to retail.
The 2026 unlisted shares sector is easier to reach than ever – and more risky. Each official portal is surrounded by a host of unauthorized fake apps, WhatsApp chat groups, and 'account handlers' that guarantee investors returns. This guide reveals the seven most common types of scams that retail investors face now, the signs to look out for in each of them, what SEBI is doing to address the issue, and the steps to take in order to avoid them.
TL;DR
1. Pump-and-Dump on Illiquid Unlisted Names
Process: A group collectively buys cheap stocks in a dubious unlisted company, hyping it up using WhatsApp groups, YouTube tips, and Telegram channels. Small investors end up holding the stock, paying inflated prices, once the original group books its profits and exits.
The case of April 2026: SEBI’s interim directions restrained the trading activities of 39 persons related to RRP Semiconductor in light of a huge spike in unlisted price from around ₹15 to ₹10,887, which lacked any rationale. The promoters and entities associated with the promoters were reported to be the main sellers at that price level.
Warning signs : Promotion of a specific unlisted stock in multiple WhatsApp / Telegram groups - “Insider information” with respect to the IPO of the company soon - 5X+ increase in price within 3 months without a DRHP application / any company development - Claimed “early allocation” / broker reservation quota
Precautions : Do not follow the tips. Always confirm whether there is an unlisted company with this CIN code on MCA website - Whether it has filed DRHP with SEBI - Check for similar pricing on UnlistedZone, Planify and Stockify platforms
2. Unauthorized Platform Fraud
How it happens : A new "unlisted shares marketplace" platform emerges, usually in the form of a cool application or website, providing pre-IPO stocks at good prices. The platform is unregistered with SEBI and works outside the regulatory purview. In many cases, the money gets misappropriated, demat transactions do not go through, or the shares are fake.
Recent 2026 cases : SEBI has taken regulatory actions against three unregistered platforms: Alt Graaf, Tap Invest, and Stable Investments who were selling unlisted debt securities to retail clients without SEBI's approval. The unregistered platforms had official looking branding and operated without any trouble until SEBI intervened.
Red flags: The platform does not appear in the SEBI registered intermediaries database - Unverifiable background of founders on LinkedIn / public domain - WhatsApp-based customer support with no phone number or physical office - Sensitive credentials requested during onboarding ("for enabling the trade") - Quoted prices on the platform differ >10% from well-known secondary marketplaces
Protection: Ensure that only those websites are utilized which have registered under SEBI / RBI / IRDAI categories. However, when talking about unlisted stocks, there are five major websites that have been operating since 2026 in India, and these are UnlistedZone, Planify, Stockify, Altius Investech, and InCred Money.
3. Pre-Investment WhatsApp Scams
Here’s how it happens : There has been an increase in pre-investment scams, meaning that the scammer gets away even before you interact with the alleged intermediary. In the regular sequence of events, the fraudulent entity starts by adding you to their stock-recommendation WhatsApp group, gains your confidence through paper trades conducted through the group, and then offers you either “private placement” or a “pre-IPO offering” for which you need to send your money immediately into a personal account.
These funds never get to the regulated financial system because there is no intermediary at all. Once the scamming is done, the scammers would have blocked you from the group and the person who received the money is nowhere to be found.
Warning signs include: Being added to the group without invitation - Use of a name by the admin that resembles one on the SEBI RA list, but can’t be verified - First few calls are free, after which the “exclusive offer” is made - Request for payment into a personal savings account, and not escrow or broker account - Pressure to wire the money fast (for example, “only three lots left”)
Prevention: Only make payments to your SEBI-registered intermediary’s legitimate escrow/pool account. Before making any payments, check if the receiver is a registered RA by verifying the registration number on the SEBI website. According to SEBI’s 2026 advisory, fraudsters are now replicating SEBI-registered RAs; hence, always be cautious.
4. Account-Handling Scams
The scam : The perpetrator poses as a “trading advisor” who will trade or manage your trading or demat account for you, offering “risk-free profits” in return for sharing your credentials. After gaining access to your account, he/she trades in such a way that he/she benefits from these transactions while draining your account balance.
This modus operandi was particularly highlighted by SEBI in its Advisory issued in February 2026.
Warning Signs: Any request for trading PIN, broker credentials, or two-factor authentication (2FA) codes "Trade for me, and we share the profits" approach. - Guarantee of monthly returns by actively trading stocks. - Asking you to install remote control software like AnyDesk or TeamViewer on your trading system.
Protection: Legitimate financial advice services, whether or not registered, will never ask for your user name or password. SEBI-approved investment advisers operate on a strictly fee-based system and do not operate on a profit-sharing system. Discretionary trading for your benefit is done only when you give your broker a letter of authorization.
5. Fake “Pre-IPO Allocation” Pitches
What happens : There is an offer to acquire pre-IPO shares with “anchor investor quota” or “promoter friend allocation” from a forthcoming IPO with discounts relative to expected listing prices. The buyer pays for the shares which never get delivered. The “quota” does not exist.
With the emergence of legitimate pre-IPO secondary market, scams like these have multiplied. They use terms and jargon that resemble genuine operations.
Warning signs: Shares of a company that hasn’t announced the DRHP (there is no actual allocation) - “Quota” language implying scarcity of shares - Payment made directly into someone’s bank account rather than through a platform - Unverifiable chain of demat transactions; the seller cannot provide proof of CDSL/NSDL DIS ahead of time - Pressure to decide before “quota closes”
Protection: In a pre-IPO secondary market deal, a platform facilitates the transaction, involving a demat-to-demat chain. Always require (1) a demat statement proving ownership by the seller, (2) transfer agreement document, (3) payment to be released through escrow, (4) transaction to be done via a SEBI-registered intermediary.
6. Unregistered Preference Share & Debenture Schemes
The modus operandi : The firm issues preference shares, NCDs or CDs on a direct private placement basis to individual investors, bypassing the mandatory SEBI prospectus requirement and the associated disclosure requirements. The investor receives an instrument which is usually found to be worthless later on.
Action taken by SEBI in 2026 : SEBI took action against 193 companies which had issued securities (preference shares, NCDs, CDs or even equity) to individuals without meeting the mandatory legal requirement. Often times, the investor finds himself disappointed with the company’s intentions in redeeming the instrument and SEBI finds itself unable to recover anything in most of these instances.
Signs to watch out for: “Private placement” promotion from a small company which you have never heard about; High coupon or dividends offered on preference shares and NCDs (usually in excess of 12% at a time when banks offer around 7%) Lack of a SEBI prospectus or listing on any recognized stock exchange Unclear corporate structure (promoter’s background cannot be verified easily)
Safety : Invest only in fixed income securities quoted on the National Stock Exchange (NSE)/Bombay Stock Exchange (BSE) or via SEBI-registered stockbrokers. Should you come across any private placement opportunities, ensure that the company has submitted its mandatory papers to the SEBI. In case of any doubts, say no.
7. Counterfeit Demat Transfers
How it works. Here’s how this happens. The “dealer” sells you unlisted stocks, and when you remit money, he initiates a demat transaction that either (a) transfers your shares into an alternate demat account other than yours; (b) reverses prior to settlement; or (c) records a demat transfer with forged share certificates.
Red flags - Demat transfer instruction (DIS) slip provided AFTER remittance of money instead of before it, in the escrow process - The dealer asks you for your demat DP-ID and Client-ID and Account Holder Name to "verify" your identity prior to transferring shares into your account (legitimate transfers do not require any such verification by the recipient) - Transfer initiated from a demat account held by someone other than the dealer invoicing you - Delayed settlement post T+3 working days with vague reasons
Precautions You should always make platform based transactions where the platform will hold escrow the shares and credit your demat account only after verifying your payment. If you transact directly with a dealer, make sure he provides you an official receipt along with his PAN and the demat account number he intends to transfer the shares into, in addition to the ISIN.
SEBI’s Tools & What’s Being Done
SEBI Check : Introduced in 2026, SEBI Check enables retail investors to check whether an entity has been registered with SEBI, under which category and if there are any proceedings against it. It should be checked before sending any funds to any intermediary.
Enforcement via technology : SEBI's monitoring system has now been extended to check WhatsApp group chats, Telegram channels, and Twitter/X accounts selling unlisted stocks. The recent action against RRP Semiconductor took place after this kind of monitoring – detection of pump-and-dump schemes.
SCORES Portal : SEBI Complaints Redress System — report scams through this. Timeliness of responses has seen a marked improvement since 2025–26 compared to previous years.
The Verification Checklist Before Transferring Any Money
Run all seven of these. If any one fails, do not transfer.
1. Platform / dealer is verifiable on SEBI Check with active registration
2. Company’s existence verifiable on MCA portal (CIN check)
3. Share’s ISIN exists in NSDL / CDSL records
4. Seller’s demat account holder name matches the invoice name
5. Payment goes to an escrow / registered pool account, not an individual bank account
6. Written transfer agreement covers price, ISIN, quantity, and timeline
7. Independent price reference exists at established secondary platforms (within 10% of quote)
What to Do If You’ve Been Scammed
- Stop everything at once : If you had shared bank login details, call the fraud department of your bank to freeze the outflows.
- Submit SCORES complaint on sebi.gov.in/scores with all transaction particulars and images.
- Submit cyber-crime FIR on cybercrime.gov.in if any kind of digital communication or fund transfer took place.
- Submit your complaint to the bank’s customer grievance cell since the bank has up to 90 days for charge-back.
- Collect all evidence : WhatsApp messages, payment documents, communication, whatever is documented.
- Do not communicate with the scammer again for settlement. Secondary scams often follow primary scams.
Frequently Asked Questions
Question : Is the market for unlisted stocks regulated in India?
Answer: To some extent. The stock issuing company falls under the regulation of the Companies Act and SEBI regulations. However, the secondary market, where the trading of such securities takes place, is not under any regulation but SEBI is increasingly taking measures starting from 2024 to regulate the same, as seen by enforcement against the likes of altGraaf, Tap Invest, Stable Investments, and 193 unregistered issuers in 2026.
Question : How can I confirm that a particular unlisted stocks trading platform is legit?
Answer: Three things can be done to verify this – (a) check whether the platform is registered with SEBI/RBI/IRDAI according to its category, (b) there should be a verified address for the business as well as an actual team on LinkedIn, and (c) payments must be through escrow or pool accounts and not individual payments. The known Indian players from 2026 include – UnlistedZone, Planify, Stockify, Altius Investech, and InCred Money.
Question: Will SEBI be able to help me recover the money I have lost due to scamming?
Answer: Yes, sometimes, but often no. SEBI will try to seize the assets of the scammer and attempt recovery through legal means from securities tribunals, but recovery becomes difficult when the funds have already been siphoned off into several bank accounts or beyond the banking system. The sooner you file your complaint (hours, not days), the more likely the recovery.
Question: Are pre-IPO shares better than secondary unlisted shares?
Answer: No. Both are of the same category of assets (unlisted stocks). There are risks associated with pre-IPO: (a) allocation scam (there are no such stocks); (b) lock-in risks in case of filing DRHP; and (c) risks associated with the long period between the time of purchase and listing. Use all seven verification criteria regardless of whether the seller calls the stocks pre-IPO or secondary.
Question: What are the ways to report a scam on unlisted stocks?
Answer: Through different routes: SCORES (sebi.gov.in/scores), cyber-crime.gov.in, company’s compliance officer if the firm is registered, and platform email for grievances. If the group is a scam WhatsApp group, you may report the entire scam to WhatsApp/Telegram – their team would then act on your report.
Question: Are all the requests by the dealers for KYC documents genuine?
Answer: Yes, the KYC documents (PAN Card, Aadhar Card) are required for any unlisted stock transaction. However, what is not usual or normal: requesting for the OTP code, broker’s login id and passwords, banking application password or 2FA.
Question: Difference between an unregistered intermediary and unregistered investment advisor?
Answer: Unregistered intermediary means the firm is operating without SEBI registration in terms of its securities activities (the act itself being illegal). Unregistered investment advisor would mean the firm is offering investment advisory services without SEBI RA/IA registration, which is illegal under the 2013 IA regulations and 2014 RA regulations. Both cases mean penalties AND there will be no SEBI support available in case of disputes.
Question: How do I check the SEBI registration of a platform?
Answer: Yes, it’s possible. Just visit sebi.gov.in → Intermediaries → Recognized Intermediaries and search using name or registration number. The category of the platform will tell you whether that particular platform is allowed to offer certain kinds of activities.
Disclaimer:
This is written for educational and informational purposes only. Nothing here constitutes investment advice or a recommendation to buy or sell securities. All data is sourced from publicly available information. Investments in securities markets are subject to market risks — please read all offer documents carefully before investing.
