Nithin Kamath, Zerodha founder and CEO has asked retail investors to use an AI chatbot for any stock tips they get via messaging apps, “so the next time you get a message promising easy money, just ask Claude or ChatGPT whether it’s a good idea. It could save you a lot of money,” he wrote on October 20 on X and his Substack blog.
The ED just froze trading accounts holding about ₹200 crore in an alleged WhatsApp-driven pump and dump involving two listed companies.
— Nithin Kamath (@Nithin0dha) October 20, 2026
It's crazy that even in 2026, people still fall for stock tips on WhatsApp, Telegram, SMS, and social media. This is probably the silliest way… pic.twitter.com/XxKGcIB5Bw
This was in reaction to the Enforcement Directorate’s (ED) statement of October 19 about their freezing of trading accounts worth about Rs 200 crore in an alleged WhatsApp-driven “pump and dump”. In these kinds of schemes, a certain stock is targeted and endorsed urgently so that buyers can be drawn in and those holding can sell it to them. “We’re already seeing more pump and dumps, whether through WhatsApp groups or influencers peddling IPOs and stocks. This won’t end well,” Kamath wrote in the same post.
What did the ED allege?
On October 16, 2026, under the Prevention of Money Laundering Act, 2002, the ED’s Mumbai Zonal Office-I searched 29 premises in the regions of Mumbai, Nashik, Ahmedabad, Gandhinagar, Surat and Bhavnagar. The shares in this case are of R M Drip and Sprinklers Systems Ltd and R&B Denims Ltd. According to the ED:
- The allotments: The two companies had issued over over 3.5 crore shares and convertible warrants to selected persons and entities between April 2023 and March 2024. “A large part of the money paid for these allotments came from a small circle of connected persons, firms and lenders,” the ED said.
- The tips: WhatsApp communities such as “Multibagger Stocks” sent daily buy tips to retail investors from the end of December 2025 to February 2026. These groups were created by numbers on SIM cards obtained in Haryana and Mumbai in other people’s names, but were being operated from Bhavnagar.
- The sale: The ED said it “appears” that the stock of R M Drip and Sprinklers was promoted through WhatsApp groups, and that the preferential allottees “took advantage of this increased buying interest and dumped a part of their shareholding to large number of investors.”
- The freeze: Alongside the Rs 200 crore worth of trading accounts frozen by the ED, documents, digital devices and records of share transactions were also seized.
“Further investigation is under progress,” the ED said.
What can an AI chatbot check?
If the web searching tool is enabled, a user may paste in a prompt and have the chatbot verify it with what can be found online. However, the ED’s case here is focused on the people behind the funding of the allotments and running of these groups. It must be noted that a chatbot usage solution here may not be relevant in this aspect because it cannot tell a user who forwarded this message or who is selling with the prices rising. It can only identify warning signs such as urgency and promises of easy returns as is common with tips.
For the narrower aspect of whether the payment requests are from registered intermediaries, SEBI’s tool, SEBI Check, may be used. It also publishes its own guidance on pump-and-dump scams.
What do SEBI’s rules say about AI?
SEBI regulates how firms under its jurisdiction use AI under the SEBI (Intermediaries) (Amendment) Regulations, 2025 which is in force since February 10, 2025. It says that a regulated entity that uses AI tools is solely responsible for “and techniques it relies upon or deals with,” and also for investor data and legal compliance. Companies like OpenAI and Anthropic which made ChatGPT and Claude, are not SEBI-registered so answers from them would not be a part of this framework.
In a written reply to the Lok Sabha on March 23, 2026, SEBI had said that an escalation of 1.33 lakh misleading or manipulative social media posts had been made to platforms by February 28, 2026. This reply, by Minister of State for Finance Pankaj Chaudhary, also said that SEBI was not using AI tools to track such content, MediaNama reported. Further, it said that SEBI does not have data on financial losses caused by scams where registered entities are impersonated on social media.
Questions we have sent
MediaNama has written to SEBI, Zerodha, OpenAI and Anthropic, and will update this story with their responses.
To SEBI:
- Whether SEBI has started using AI tools to detect manipulative securities content since its March 2026 reply to Parliament.
- Whether a general-purpose chatbot’s answer on whether to buy a specific stock could amount to investment advice under SEBI’s rules.
- Whether SEBI plans guidance for investors who use AI chatbots to assess stock tips.
To Zerodha:
- Whether Zerodha tested how ChatGPT or Claude respond to stock-tip messages before Kamath recommended them.
- Whether Zerodha plans to offer such a check within its own platforms, where SEBI’s AI rules would apply.
To OpenAI and Anthropic:
- Whether ChatGPT and Claude are designed or evaluated for judging whether a specific stock tip is part of a scam.
- What their terms of use tell users in India about relying on answers for investment decisions.
Also read:
- Finance Ministry: SEBI is not using AI tools to track misleading securities content on social media
- SEBI Gets Power to Order Removal of False Stock Content on Digital Platforms: What it Means
The post After ED’s WhatsApp pump-and-dump searches, Zerodha founder points investors to AI chatbots appeared first on MEDIANAMA.