Introduction: In a press release dated February 13, 2024 (PR No.02/2024), the Securities and Exchange Board of India (SEBI) issued a stern warning to the public concerning the increasing prevalence of unscrupulous entities falsely posing as SEBI-registered intermediaries. The regulator emphasized the importance of investor diligence and caution against falling prey to enticing promises of guaranteed high returns on investments.
Detailed Analysis:
1. Rising Trend of Fraudulent Entities: SEBI has noticed a surge in entities and online platforms falsely claiming SEBI registration. These entities attract unsuspecting investors with fake SEBI certificates, promising lucrative returns. The caution underscores the need for investors to exercise caution and verify the legitimacy of entities claiming SEBI registration.
2. Investor Caution and Due Diligence: SEBI urges investors to conduct due diligence and verify the registration status of any entity claiming SEBI registration. High-return investments often come with heightened fraud risks, and SEBI stresses that there are no guarantees of assured returns in the securities market. Investors are advised to exercise skepticism and prudence.
3. Guidelines for Investors:
- Verify Before Investing: Investors are strongly advised to verify an entity’s registration status on the SEBI website before engaging with any investment service provider.
- Beware of High Return Promises: Caution against entities promising assured or exceptionally high returns. The correlation between high returns and high risks is emphasized.
- SEBI Enforcement Actions: Investors should check SEBI’s website for details of enforcement actions taken against any entity or intermediary.
- Knowledge Empowers: SEBI encourages investors to empower themselves with knowledge about the securities market. The principle of “knowledge as the best defense against fraud” is highlighted.
4. Investor Education Resources: SEBI directs investors to its investor education website (https://investor.sebi.gov.in) for comprehensive resources on understanding the basics of investing, recognizing the importance of dealing with registered intermediaries, and more. Being well-informed is emphasized as a crucial aspect of a safer investment journey.
Conclusion: SEBI’s cautionary statement serves as a timely reminder for investors to exercise vigilance and diligence in the face of fraudulent entities making false claims. By verifying registration status, avoiding high-return promises, staying informed about enforcement actions, and empowering themselves with knowledge, investors can contribute to a safer and more secure investment environment. SEBI reiterates its commitment to protecting investors and maintaining the integrity of the securities market.
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Securities and Exchange Board of India
PR No.02/2024
SEBI cautions public against dealing with unregistered entities
The Securities and Exchange Board of India (SEBI) has observed a rising trend of unscrupulous entities and online platforms that falsely claim to be registered with SEBI as intermediaries. These entities often entice the general public by showcasing fake certificates purportedly issued by SEBI and promising or implying assured, high returns on investments.
SEBI hereby cautions investors against placing their money with any entity based on such claims. Investors are urged to conduct due diligence and verify the registration status of any entity claiming to be a SEBI-registered intermediary. It is imperative for investors to understand that investments offering high returns usually involve high risk including fraud risk and there can be no guarantees of assured returns in the securities market.
While investing in securities market, investors are advised to;
i. Verify before investing: Before engaging with any investment service provider, investors are strongly advised to verify the entity’s registration status on the SEBI website (sebi.gov.in) by following the below path -* www.sebi.gov.in -* Intermediaries / Market Infrastructure Institutions -* Recognised Intermediaries.
ii. Beware of promises of high returns: Investors should be cautious of any entity that promises assured or exceptionally high returns. The principle of ‘higher returns come with higher risks of losing your money all-together’ holds true in the securities market.
iii. Verify enforcement action by SEBI: The details of any enforcement action taken by SEBI against any entity/ intermediary is available on SEBI website on the following path -*sebi.gov.in -* Enforcement -* Orders.
iv. Be well informed: SEBI encourages investors to empower themselves with
knowledge about the securities market for a safer investment journey. Knowledge is your best defense against fraud. For comprehensive resources on understanding the basics of investing, recognizing the importance of dealing with registered intermediaries, and more, please visit SEBI’s investor education website at https://investor.sebi.gov.in.
Mumbai
February 13, 2024
