'If something is too good to be true...': Zerodha founder Nithin Kamath reveals the ugly side of markets

Zerodha founder Nithin Kamath has a stark reminder for market enthusiasts chasing easy money: “If something is too good to be true, it almost always is.” 

His post on X comes on the heels of SEBI uncovering two audacious scams that siphoned off a staggering ₹61 crore from unsuspecting investors.

One scam spun a web of lies around a small company’s IPO, while the other featured a flashy financial influencer selling hollow promises. Both expose the dark side of greed and gullibility in the markets.

Scam 1: A ₹44 crore IPO house of cards 
A small company launched an IPO to raise funds for “revolutionary software” essential for smart city projects. Investors piled in, oversubscribing the IPO by 345 times. But the dream unraveled when SEBI dug deeper.

The software vendor? A shell company with no real operations. SEBI found its office empty, its financial records fabricated, and its client list pure fiction. Worse, the vendor was handpicked in a shady deal with no tendering process.

In the end, SEBI halted the IPO and ordered the company to refund the ₹44 crores raised, leaving investors to question if they were victims of negligence or outright fraud.

Scam 2: The ₹17 crore finfluencer fiasco
Enter the self-styled “Baap of Chart,” a financial influencer who turned market advice into a spectacle. Promising guaranteed returns, he raked in ₹17 crores by selling overpriced courses and offering direct investment advice under the guise of education.

SEBI’s findings laid bare his strategy:

He wasn’t just losing money on his own trades; he was concealing those losses while touting success. His advice wasn’t authorized, turning his operation into an illegal investment scheme.
The regulator barred him and his associates from market activities and ordered them to repay every rupee collected.

These scams underscore Kamath’s point: shortcuts in the stock market lead nowhere but ruin.