The Securities and Exchange Board of India (SEBI) cautioned investors on Monday, February 26, against fraudsters posing as employees or affiliates of SEBI-registered foreign portfolio investors (FPIs) and claiming to offer trading opportunities.
The regulatory body clarified that the FPI investment route is unavailable to resident Indians.
Fraudsters are luring victims through online trading courses, seminars, and mentorship programmes in the stock market, leveraging social media platforms like WhatsApp or Telegram and also live broadcasts.
The regulatory body has been receiving complaints regarding fraudulent trading platforms that falsely claim or suggest affiliation with SEBI-registered FPIs. These fraudulent claims offer trading opportunities through FPI or foreign institutional investor (FII) sub-accounts or institutional accounts with special privileges, SEBI cautioned.
“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’ — all 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 regulatory body said in a release.
“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 depository participant (DP), respectively. SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors,” the regulatory body added.
