The National Stock Exchange (NSE) on Tuesday issued another notice of caution for investors to stay away from dabba/ illegal trading on the exchanges. It advised investors not to subscribe to any such scheme/product offered by any person/entity offering indicative/assured/guaranteed returns in the stock market, adding that the same is prohibited by law.
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In the notice, the stock exchange said, "A person named "Jensmon V George" operating through mobile number "9995103502" is providing dabba/illegal trading platform with assured profit. He is also offering to handle trading account of investor by asking investors to share their user ID and password."
In a similar notice, on Monday, NSE said that a person named Narendra V Sumaria is offering dabba trading. The exchange said that investors are cautioned and advised not to subscribe to any such scheme/product offered by any person providing illegal Dabba trading activity in the stock market as the same is prohibited by law.
Another person named "Mr. Nitin Shantilal Nagda" has also been named in NSE’s communication. Nagda is also said to be offering dabba trading. NSE said that the association/registration as an AP of the named person was subsequently cancelled.
"It may also be noted that the above-mentioned person was associated/registered with a Trading Member (TM) as an Authorised Person (AP) and the said association/registration as an AP was subsequently cancelled by the TM," NSE said in its communication.
Dabba trading is a form of informal trading that takes place outside the purview of the stock exchanges like BSE and NSE. The practice is illegal in India. In dabba trading, traders bet on stock price movements without a real transaction and hence there is no physical ownership of a particular stock unlike when it is done on an exchange.
In addition to being violative of the securities laws, dabba trading also falls within the purview of Section 406, 420 and Section 120-B of Indian Penal Code, 1870.
NSE has cautioned investors and advised them not to trade on such illegal trading platforms. Participation in such illegal platforms is at the investor’s own risk, cost and consequences as such illegal trading platforms are neither approved nor endorsed by the Exchange.
"The investors may note that for any kind of disputes relating to such prohibited schemes none of the following recourses will be available to investors:
1. Benefits of investor protection under Exchange's Jurisdiction
2. Exchange dispute resolution mechanism
3. Investor grievance redressal mechanism administered by Exchange," NSE said.
(Edited by : Anushka Sharma)
First Published: Apr 17, 2023 5:14 PM IST
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