The SEC investment warning issued this week underscores growing concern over unregulated financial advice and online fraud in Sri Lanka. Regulators say misleading recommendations and prohibited schemes continue to trap vulnerable investors despite repeated public alerts.
SEC investment warning highlights rising online risks for Sri Lankan investors
Sri Lanka’s financial regulators have intensified their scrutiny of online investment practices as misleading stock tips, unlicensed advice, and fraudulent schemes continue to spread across social media platforms. The latest SEC investment warning marks one of the strongest public statements yet from the Securities and Exchange Commission, which cautions that individuals offering investment guidance without proper licensing are violating regulatory laws and putting the public at risk.
The SEC stated that social media content presenting investment recommendations must come only from Registered Investment Advisors or licensed entities under its regulatory framework. The renewed warning follows a surge in online personalities promoting unsolicited stock picks, trading strategies, and investment “opportunities” that often lack analytical basis or transparency. According to the regulator, strict action will be taken against any person or group that continues to provide such advice without authorization.
The SEC emphasized that violations of the SEC Act carry serious consequences. Individuals found guilty may face prosecution before the High Court and, upon conviction, penalties that include fines of at least 10 million rupees or imprisonment for up to ten years. The commission noted that these measures are necessary to protect investors from misinformation and manipulative practices that frequently emerge across social networks.
A growing number of inexperienced or financially vulnerable individuals remain susceptible to self-proclaimed investment “gurus” on platforms such as YouTube, Facebook, WhatsApp, Telegram, and other online spaces. These promoters often portray themselves as experts while offering recommendations designed to influence investor behavior, sometimes amounting to market manipulation. Many operate without any regulatory oversight, exploiting users who may not understand the risks involved or the deceptive nature of these tactics.
The SEC’s intensified stance comes amid widespread concerns that unethical promoters are taking advantage of the trust people place in online personalities. The regulator warns that some individuals disguise high-risk strategies as guaranteed income opportunities, drawing people into schemes that can rapidly collapse and result in substantial losses. These actions undermine public confidence in legitimate capital markets and create a challenging environment for responsible investment firms and advisors operating within the law.
Adding to public anxiety, the Central Bank of Sri Lanka has issued a parallel warning about a newly identified online pyramid scheme. The regulator confirmed after investigations that an operation linked to the platform “SGO/sgomine.com” was actively conducting a prohibited scheme. Pyramid schemes, outlawed under the Banking Act, are criminal offenses not only when operated but also when promoted or financed. Despite these clear restrictions, such schemes continue to emerge in new digital formats.
Many fraudulent programs present themselves as trading platforms offering lucrative returns through cryptocurrency, stock trading, or other financial vehicles. However, authorities note that these schemes rarely involve genuine business activity. Instead, they rely on enrolling new participants whose contributions sustain earlier investors—an unsustainable cycle that inevitably collapses, leaving most participants with losses.
The Central Bank recently updated its list of companies, apps, and organizations it has determined to be prohibited schemes under the Banking Act. The list includes Tiens Lanka Health Care, Best Life International, Mark-Wo International, VML International, Global Lifestyle Lanka, Fast3Cycle International, Sport Chain app, OnmaxDT, the MTFE group and its affiliates, Fastwin, Fruugo Online, Ride to Three Freedom, Qnet/Questnet, Era Miracle, Ledger Block, Isimaga International, Beecoin App, Sunbird Foundation, Windex Trading, The Enrich Life, Smart Win Entrepreneur, Net Fore International/Netrrix, and Pro Care along with its related entities. These organizations have been identified as promoting or operating prohibited models that place participants at severe financial risk.
Authorities stress that they continue to confront a dynamic landscape in which fraudulent schemes rapidly evolve, exploiting digital reach and public financial uncertainty. As such, regulators have been compelled to intensify monitoring, collaborate with law enforcement, and issue frequent public advisories to counter these threats. The SEC investment warning and the Central Bank’s simultaneous crackdown highlight a coordinated effort to safeguard the public from predatory actors in the financial space.
Investors are urged to verify the credentials of anyone offering financial advice, remain vigilant about online platforms promising unusually high returns, and consult only licensed professionals for investment decisions. Regulators hope that sustained awareness and enforcement will gradually reduce the influence of unscrupulous promoters while reinforcing confidence in Sri Lanka’s legitimate financial institutions.