Zerodha CEO advocates for AI screening of unsolicited stock tips
Following an investigation into a large-scale WhatsApp pump-and-dump scheme, Zerodha founder Nithin Kamath has advised retail investors to use AI chatbots to verify suspicious stock recommendations.
Indian authorities have frozen approximately 200 crore rupees in trading accounts linked to an alleged pump-and-dump scheme facilitated through WhatsApp. According to the Enforcement Directorate (ED), conspirators used messaging groups to artificially inflate the prices of specific stocks before dumping their holdings onto retail investors lured by promises of easy returns.
In response to the news, Zerodha CEO Nithin Kamath issued a public recommendation for investors to consult AI tools like ChatGPT or Claude before acting on unsolicited financial advice. He suggests that AI can help identify common patterns of investment fraud, such as high-pressure sales tactics and claims of guaranteed profit, which remain prevalent on social media despite regulatory warnings.
While AI can identify manipulative messaging patterns, market experts note that it cannot bypass the need for deeper due diligence or detect the illicit funding structures behind such schemes. The Securities and Exchange Board of India (SEBI) currently maintains regulations for how financial intermediaries use AI, but the regulator has confirmed it is not yet employing AI tools to monitor manipulative content on social media platforms. The investigation into the frozen accounts is ongoing.