Stay away from fake investment ‘gurus,’ public warned

The Philippine Stock Exchange has warned against self-styled investment gurus and fund managers giving stock recommendations using various social media platforms but are not licensed to do so.

In a fireside chat with the Shareholders Association of the Philippines (SharePHIL) on Tuesday, PSE chief operating officer Roel Refran said that alongside the rise of retail investors as a market force, it was “concerning” that many people were falling prey to “fake gurus” who were using unregulated platforms like chatrooms, messaging apps and social media.

He said these self-proclaimed experts would advise people to buy certain stocks, predicting an upsurge in prices, when these stocks were really on an upward trend and claiming credit for the market-driven price movements.

These people will promise above-market returns and try to establish an alleged track record on social media to entice investors.

“Normally they would charge a monthly fee in exchange for so many sessions, maybe one-on-one sessions and they’ll give you their research reports,” Refran said.

But if these people are not connected with duly licensed brokerage houses that were regulated by the PSE and the Securities and Exchange Commission, Refran said these people were not authorized to offer asset management services.

“Turn the page. Stay away from these social media chatbox, chat rooms, Facebook pages, Instagram, Twitter, simply because we have seen that this is again part and parcel of the extended reach that the fraudsters have actually already established in terms of them being very present in social media,” Refran said.

Citing data from the PSE, retail investors accounted for 37.3 percent of market trades in the first semester of the year. This represented a much bigger chunk of trades compared to their share of 26.9 percent in 2020 and 18.2 percent in 2019.

The surge in retail participation happened during the pandemic, which was similar to what other stock exchanges have experienced as well, Refran said, thanks to the availability of online trading platforms.

Moving forward, Refran said retail participation would further increase, with the rollout of educational programs—not just by the regulators like the PSE and the SEC—but also by organizations like SharePHIL.

“Engendering financial literacy and awareness is really the base or the fundamental requirement for investors to be more aware of the risks and the rewards when they look at capital market instruments,” he said.

But Refran said investors also owed it to themselves to be careful and conduct their own due diligence to avoid falling prey to fraudsters and fake gurus.

“At the end of the day, the regulators would be a second line of defense. The first line of defense will always be us investors, because unless you click the admit, the submit or the transfer (money) button, then you are protected as an investor,” Refran said.

The same goes well for other investments other than equities being pitched by fraudsters offering returns that were too good to be true. INQ