SEBI warns investors: Beware of fraudsters in the name of facilitating foreign portfolio investors

Stock market regulator Securities Exchange Board of India has warned investors to be wary of people who offer investment advice by identifying themselves as SEBI employees or associated with foreign portfolio investors. These people are giving promises of good earnings against investment. SEBI has stated that the FPI investment route is not available to Indian residents except with certain concessions.

The Securities and Exchange Board of India issued a press release on 26 February 2024 stating that it has received complaints of several such fake trading platforms claiming to be associated with foreign portfolio investors registered with SEBI. FIIs are attracted to trading through sub-accounts or institutional accounts with special facilities.

Sebi, in its filing, said fraudsters lure investors into the stock market through online trading courses, seminars and mentorship programmes. For this, these people use social media platforms like WhatsApp or Telegram as well as live broadcast.

SEBI said that these people, being employees or associates of FPIs registered with SEBI, induce investors to download applications that induce them to apply in IPOs to buy shares and also to enjoy the benefits of institutional accounts without any official trading or demat account. To carry out these operations, they carry out their schemes using mobile numbers registered in false names.

SEBI said it is very important for the general public to understand that the FPI route is not for Indian residents except for limited exceptions in the SEBI Foreign Portfolio Investors Regulations 2019. SEBI said that there is no provision of institutional account in trading and for trading in equity market it is mandatory for investors to open a trading and demat account with a broker trading member and DP registered with SEBI.