Introduction: In a recent press release, the Securities and Exchange Board of India (SEBI) addresses the surge in complaints about fraudulent trading platforms claiming association with SEBI-registered Foreign Portfolio Investors (FPIs). This article delves into the deceptive practices identified, provides clarification for investors, and highlights SEBI’s advisory to safeguard the public from falling victim to such fraudulent schemes.
Detailed Analysis:
1. SEBI Advisory Background: Press Release No. 04/2024 emphasizes SEBI’s response to the rising concerns about fraudulent trading platforms impersonating SEBI-registered FPIs.
2. Fraudulent Practices Unveiled: Fraudsters lure unsuspecting victims through online trading courses, seminars, and mentorship programs, primarily on social media platforms like WhatsApp and Telegram. They falsely claim affiliation with SEBI-registered FPIs, enticing individuals to download applications for supposed share purchases, IPO subscriptions, and non-existent “Institutional account benefits.”
3. Modus Operandi and Social Media Exploitation: Operating under false identities, fraudsters use mobile numbers to carry out their schemes. The deceptive practices extend to live broadcasts, where individuals are misled into believing they can engage in stock market activities without the necessity of official trading or Demat accounts.
4. Clarification for Investors: The article provides essential clarification for the public, emphasizing that the FPI investment route is not available to resident Indians, except in limited exceptions outlined in the SEBI (Foreign Portfolio Investors) Regulations, 2019. It dispels the notion of an “Institutional Account” and underscores that direct equities market access requires a SEBI-registered broker/trading member and a Demat account.
5. SEBI’s Cautionary Advisory: SEBI issues a strong advisory, urging investors to exercise caution and avoid social media messages, WhatsApp groups, Telegram channels, or apps falsely claiming to facilitate stock market access through SEBI-registered FPIs or FIIs. It emphasizes that these schemes lack SEBI’s endorsement and are fraudulent.
Conclusion: As SEBI proactively addresses the rise of deceptive trading schemes, investors must stay vigilant. The advisory serves as a crucial reminder to verify investment opportunities, especially those claiming association with SEBI-registered entities. By steering clear of fraudulent platforms, investors can protect themselves from potential financial scams and ensure the integrity of their investments.
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Securities and Exchange Board of India
Press Release No. 04/2024
The Securities and Exchange Board of India (SEBI) has been receiving a number of complaints regarding fraudulent trading platforms which falsely claim or suggest affiliation with SEBI-registered Foreign Portfolio Investors (FPIs) and claiming to offer trading opportunities through FPI or Foreign Institutional Investor (FII) Sub-accounts or Institutional Accounts with special privileges.
Fraudulent Practices Identified
Fraudsters are enticing victims through online trading courses, seminars, and mentorship programs in the stock market, leveraging social media platforms like WhatsApp or Telegram, as well as live broadcasts. Posing as employees or affiliates of SEBI-registered FPIs, they coax individuals into downloading applications that purportedly allow them to purchase shares, subscribe to IPOs, and enjoy “Institutional account benefits”²all without the need for an official trading or Demat account. These operations often use mobile numbers registered under false names to orchestrate their schemes.
Clarification for Investors
It is important for the public to understand that the FPI investment route is unavailable to resident Indians, with limited exceptions as outlined in the SEBI (Foreign Portfolio Investors) Regulations, 2019. There is no provision for an “Institutional Account” in trading, and direct access to the equities market requires investors to have a trading and Demat account with a SEBI-registered broker/trading member and DP respectively. SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors.
Investor Advisory
SEBI urges investors to exercise caution and to steer clear of any social media messages, WhatsApp groups, Telegram channels, or apps claiming to facilitate stock market access through FPIs or FIIs registered with SEBI. Such schemes are fraudulent and do not have SEBI’s endorsement.
Mumbai
February 26, 2024
Whom to complaint for refund of money already deposited with these fake trading platforms. May advice soon.