Yes, Indeed. Although another way to see the question isn’t primarily whether the people engaging in tipstering, pumping dumping and frontrunning do not know whether what they are doing it is illegal or a regulatory violation or not. They are aware of that what they are doing is wrong and do it anyway.
This is a symptom which stems from an underlying disease that plagues almost every type of markets in the world, especially a relatively newer developing market such as India. Indian markets throughout their history have been a Tipster’s market, very similar to how American and British markets were when they started. Even someone as smart as Newton lost his lifesavings after being tipped into investing into the South Sea pump and dump operation.
India is a trust based nation, a safety in numbers type of country similar to other Asian cultures. Indians generally take decisions if someone tells them to and seems to play the part correct. There is a reliance on real estate brokers to get us houses, pandits to find some suitable strangers to marry, uncles to tell what career is the best, friends to buy insurance policies from and the government to decide the rest.
Then this is almost a certainty that Indians would go around asking what to do when they come to something as alluring and as complicated as the financial markets. Financial news channels spend almost their airing time telling the investor what stocks to buy, or what to do after they have bought it, by calling and asking the gurus. What is left is spent on analysing what counters did RJ entered in or exited, as if the person with 50,000 rupees in capital would be having the exact same investment logic and goals as RJ or Porinju does with their much bigger stakes.
The telegram and scammy boiler room Junta is the watered down/Spiked up version of the same idea. It would seem many members of these groups, channels, servers, or portals are innocent people being duped, but a lot of them know the risks, and they have not come to trade to beat inflation. They have come their with hopes to make a quick buck, or windfall returns. Based on this premise it makes absolute rational sense for them to turn to someone saying they are Wolf of Random Street, or The Day Trading God. Than to people with sense saying, best they can do for them is match the market returns, or telling them that trading is risky. They either know that already or do not wish to be told that.
So long as this particular segment of market participants continue to exist, the Gurus shall continue to exist. Its like a Hydra, cut one head, two more shall grow in its place.
Although its not all doom or gloom in this regard. Indian markets are developing over time. The regulators which are already on par with Global standards are being given more teeth and claws to root out market efficiencies.
The clear example of this progress is being seeing in Brokers. Who were initially all very scammy, front runny, fly by night operations. But overtime due to brokers like Zerodha, Bank Brokers and other big players. Your likelyhood of running into a scammy brokers is ofcourse reducing.
Overtime as the market expands and strengthens like US and UK, the percentage of these bad actors would reduce to a percentage so small, it can be rounded off to zero.
