In a recent development, the Securities and Exchange Board of India (SEBI) has issued a stern advisory warning against fraudulent trading schemes falsely claiming affiliation with SEBI-registered Foreign Portfolio Investors (FPIs). These schemes, aimed at Indian residents, promise trading opportunities through FPI or Foreign Institutional Investor (FII) Sub-accounts or Institutional Accounts with supposed special privileges.
Identified Fraudulent Practices
The modus operandi of these fraudsters involves enticing victims through various online platforms such as trading courses, seminars, and mentorship programs in the stock market. Leveraging social media platforms like WhatsApp or Telegram, as well as live broadcasts, they pose as employees or affiliates of SEBI-registered FPIs. Victims are encouraged to download applications that allegedly enable them to purchase shares, subscribe to IPOs, and access "Institutional account benefits" without the necessity of an official trading or Demat account. These operations often use mobile numbers registered under false names to execute their schemes.
Clarification for Investors
It's imperative for the public to understand that the FPI investment route is not available to resident Indians, except for limited exceptions outlined in the SEBI (Foreign Portfolio Investors) Regulations, 2019. Contrary to the claims made by these fraudulent schemes, there is no provision for an "Institutional Account" in trading. Direct access to the equities market necessitates investors to have a trading and Demat account with a SEBI-registered broker/trading member and DP respectively. Importantly, SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors.
Investor Advisory
SEBI strongly urges investors to exercise caution and refrain from engaging with any social media messages, WhatsApp groups, Telegram channels, or apps claiming to facilitate stock market access through FPIs or FIIs registered with SEBI. These schemes are unequivocally fraudulent and lack SEBI's endorsement.
In conclusion, SEBI's advisory serves as a crucial reminder for investors to remain vigilant and informed while navigating the intricacies of the stock market. By staying informed and exercising due diligence, investors can safeguard themselves against falling prey to fraudulent schemes and protect their hard-earned capital.
Mumbai, February 26, 2024
