The Securities and Exchange Board of India (SEBI) on February 26 issued a warning alerting investors about deceptive trading platforms falsely claiming to provide stock market access to Indians through the Foreign Portfolio Investors (FPIs) route.
The markets regulator noted that fraudsters are luring victims through online trading courses, seminars, and mentorship programs related to the stock market. They leverage social media platforms such as WhatsApp or Telegram, and live broadcasts, to entice individuals.
Impersonating SEBI-Registered FPIs
Posing as employees or affiliates of SEBI-registered FPIs, these individuals persuade people to download applications that allegedly enable the purchase of shares, subscription to initial public offerings (IPOs), and access to “institutional account benefits.”
SEBI emphasised that these operations often utilise mobile numbers registered under false names for their deceptive schemes.
The cautionary statement follows numerous complaints received by SEBI regarding fraudulent trading platforms falsely claiming affiliation with FPIs and offering trading opportunities through FPI or institutional accounts with supposed special privileges. SEBI clarified that, as per its FPI Regulations, the FPI investment route is not available to resident Indians, with limited exceptions.
Clarification for Investors
Additionally, the regulator emphasized that there are no provisions for an “Institutional Account” in trading. Access to the equities market requires investors to possess a trading and demat account with a SEBI-registered broker and depository participant, respectively. The regulator clarified that it has not granted any relaxations to FPIs concerning securities market investments by Indian investors.
In an advisory to investors, the regulator also cautioned them to “stay vigilant” and avoid any social media messages, WhatsApp groups, Telegram channels, or apps claiming to facilitate stock market access through FPIs or foreign institutional investors (FIIs) registered with SEBI. It asserted that such schemes are fraudulent and lack SEBI’s endorsement.
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Published: 27 Feb 2024, 08:41 AM IST
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