The SEBI has issued an advisory warning against fraudulent trading schemes targeting Indian residents. These schemes falsely claim affiliation with SEBI-registered Foreign Portfolio Investors (FPIs) and promise trading opportunities through FPI or Foreign Institutional Investor (FII) sub-accounts or institutional accounts with special privileges. Investors have been advised by SEBI to exercise vigilance and avoid any social media messages or apps that claim to facilitate stock market access through FPIs or FIIs registered with SEBI.
Fraudulent Practices Identified:
a) Fraudsters use online trading courses, seminars, and mentorship programs to entice victims in the stock market.
b) They pose as employees or affiliates of SEBI-registered FPIs and encourage individuals to download applications that supposedly allow share purchases, IPO subscriptions, and access to “institutional account benefits.”
c) These operations often use mobile numbers registered under false names.
SEBI Clarification for Investors:
a) The FPI investment route is not available to resident Indians, except for limited exceptions outlined in the SEBI (Foreign Portfolio Investors) Regulations, 2019.
b) There is no provision for an “Institutional Account” in trading. Direct access to the equities market requires investors to have a trading and Demat account with a SEBI-registered broker/trading member and DP (Depository Participant), respectively.
c) SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors.
SEBI Advisory for Investors:
a) Exercise caution and avoid social media messages, WhatsApp groups, Telegram channels, or apps claiming to facilitate stock market access through FPIs or FIIs registered with SEBI.
b) Such schemes are fraudulent and do not have SEBI’s endorsement.
SEBI Advisory dated 26/02/2024: Avoid Fraudulent Schemes of Trading through FPIs/FIIs