The Rising Threat of Fake SME (small & medium enterprise) IPO and Pre-IPO Share Frauds
It begins with an exciting pitch:
The Rising Threat of Fake SME (small & medium enterprise) IPO and Pre-IPO Share Frauds
It begins with an exciting pitch:
"Sir, we can get you early access to Pre-IPO shares at a special discount. Once the company lists, you’ll easily double your money. This is an insider deal — don’t miss out!"
The fraudster poses as a broker, intermediary, or insider with connections to the primary market. They offer you shares in a fast-growing SME IPO or Pre-IPO placement that seems too good to pass up.
You transfer the money.
The “allotment” never comes.
And so do the fraudsters — they vanish.
These scams exploit investor interest in initial public offerings (IPOs) and small & medium enterprise (SME) listings, which often generate buzz due to the potential for quick listing gains.
Fraudsters:
Pose as brokers, merchant bankers, or insiders
Offer “exclusive allotments” of Pre-IPO or SME shares at discounted rates
Share fake documents, allotment letters, or receipts to look genuine
Collect money in personal accounts, instead of regulated channels
Once they’ve collected funds from multiple investors, they disappear — leaving victims with neither shares nor refunds.
Greed for quick gains: Pre-IPO and SME IPOs are often associated with high listing returns.
Fear of missing out (FOMO): Fraudsters use urgency — “limited allotment, act now”.
Use of jargon: Terms like “anchor investors,” “exclusive tranche,” or “friends & family allotment” make the fraud sound legitimate.
Lack of verification: Many investors don’t check if the intermediary is SEBI-registered.
An IIM Ahemdabad employee was scammed of 50 lacs in a bogus SME IPO pitch via WhatsApp.
Remember: There is no “backdoor allotment.” IPOs and SME issues follow strict SEBI processes. Shares are allotted transparently.
Never transfer funds to personal accounts of so-called brokers or insiders. Use only official banking channels linked to your demat and trading account.
Check if the intermediary is SEBI-registered before entertaining any offer.
Beware of fake allotment letters. All genuine allotments are credited directly to your demat account, never through emails or PDFs.
Don’t fall for guaranteed returns. IPOs, especially SME IPOs, carry risks like any other equity investment.
Report suspicious approaches to SEBI, stock exchanges, or cybercrime.gov.in.
Fraudsters thrive on hype and shortcuts. They promise you a “special seat at the IPO table,” but in reality, there are no secret allotments or insider discounts.
So the next time someone offers you Pre-IPO or SME IPO shares outside of official channels, remember to Pause, Think and Verify.
Be an Atmanirbhar Investor!
Because while investing, the only “exclusive access” worth trusting is the one regulated and recorded in your own demat account.
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