Exploitation of Investors by Private Agents

Buying or investing in intangible products often draws attention and raises questions about
the return on investment. We have had an emergence in investing in peculiar stuff in the past
years under the influence of following the trends and apparent profitability. However, one
such market which has gained attention for its promised returns Pan-India is the Stock
Market. The stock market is where interested investors buy and sell shares of companies.

There has been an exponential growth of investors in recent times, especially women. The
graph of female investors in India rose to 28% in 2024 from 15% in 2017. Although, the
general public can invest in the stock market with ease; for additional convenience there are
private agents available. These agents advise, recommend and update the investors about
the highs and lows of the stock market. As all services demand their fair share of service
charges, so do these private agents.

As they say, every rose has its thorn. Despite working for convenience, private agents tend
to cause inconvenience in the long run. For increased profitability, they prioritise their
financial benefits over their investors. By tempting amateur investors with high return values,
they lead them to invest in shares which can be full of risks. This is one of the many ways in
which agents generate additional revenue. Docile investors are easily fooled by agents into
buying shares that do not meet their financial goals and only exceed their risk-taking
capacity. Agents earn money ethically, through their fees, and unethically, through the
commissions during the transactions- leaving their investors in huge loss.

Private agents have smartly plotted a few unscrupulous methods to increase their profits.
One of these methods is Bucketing. Bucketing is an unethical business practice in which an
agent effectively steals from their investor client. Specifically, it involves lying to the client
about the terms on which a trade was executed to profit from the difference between the
actual and the execution prices which were informed.
Another method is Churning. It is a practice done by private agents to generate revenue by
buying and selling securities to get commissions. It minimises the investor's monetary
benefits.
Another artifice used by the private agents is applying hidden charges in the fees paid by the
investors. These agents tend to take advantage of the fact that their clients lack proper
knowledge of the stock market and rely on them for all kinds of trading.
Exploitative practices like these can erode the investor's trust and harm their economic
income. Certain private agents may engage in manipulative practices to artificially inflate or
deflate stock prices for their benefit. These practices, not only harm the agent's clients but
also the oblivious investors who rely on accurate market information to make informed
decisions.
Investment in "knowledge" is necessary for profits in investment. Thus, the best way to not
fall into the traps of these private agents is to acquire knowledge about all the stocks and do
thorough research about the market. The only defence against this trickery is to know the
market backwards and forwards. So, stock your knowledge to invest in the market!