Beware of Fraudulent Trading Schemes Claiming To Be Offered to Indian Residents by FPIs: SEBI
Moneylife Digital Team 26 February 2024
Market regulator Securities and Exchange Board of India (SEBI) has urged 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 foreign portfolio investors (FPIs) or foreign institutional investors (FIIs) registered with SEBI. Such schemes are fraudulent and do not have SEBI's endorsement, it says.
 
In a release, SEBI says it has received several complaints regarding fraudulent trading platforms that falsely claim or suggest affiliation with SEBI-registered FPIs and claim to offer trading opportunities through FPI or FII sub-accounts or institutional accounts with special privileges. 
 
"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 initial public offerings (IPOs), and enjoy 'institutional account benefits' without the need for an official trading or demat account. These operations often use mobile numbers registered under false names to orchestrate their schemes," the market regulator says.
 
The 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 a demat account with a SEBI-registered broker or trading member and deposity participant (DP), respectively. SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors," SEBI added.
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