The Securities and Exchange Board of India (SEBI) on February 26 issued a warning alerting investors to fraudulent trading platforms fake claiming to provide stock market access to Indians through the Foreign Portfolio Investors (FPI) route.
The market regulator noted that fraudsters are luring victims through online trading courses, seminars and mentoring programs related to the stock market. They utilize social media platforms like WhatsApp or Telegram and live broadcasts to attract individuals.
Imitating SEBI Registered FPIs
Posing as employees or affiliates of SEBI-registered FPIs, these individuals persuade people to download applications that supposedly enable the purchase of shares, subscription to initial public offers (IPOs) and access to “institutional account benefits”.
SEBI emphasized that these operations often use mobile phone numbers registered under fake names for their fraudulent schemes.
The warning 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 has 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 “Institutional Account” in business. Access to the stock market requires investors to own a trading and demat account with a SEBI-registered broker and depository participant, respectively. The regulator clarified that it has not given relaxation to FPIs on securities investments by Indian investors.
In an advisory to investors, the regulator also warned them to “remain vigilant” and avoid any social media messages, WhatsApp groups, Telegram channels or apps that claim to facilitate stock market access through FPIs or foreign institutional investors (FIIs) registered with SEBI . It claimed that such schemes are fraudulent and lack the support of SEBI.
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Published: 27 Feb 2024, 08:41 IST
(tagsTo Translate) markets