Market regulator the Securities and Exchange Board of India (SEBI) on Monday warned investors of fraudulent trading schemes by people posing as employees or affiliates of SEBI-registered Foreign Portfolio Investors (FPIs). The regulator said that it has been receiving several complaints regarding fraudulent trading platforms that falsely claim or suggest an affiliation with SEBI-registered FPIs.
Sebi said these platforms are claiming to offer trading opportunities through FPI or Foreign Institutional Investor (FII) sub-accounts or Institutional Accounts with special privileges.
As per Sebi, 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 IPOs, and enjoy “Institutional account benefits” — all without the need for an official trading or Demat account, the regulator said in a press release.
Sebi said these operations often use mobile numbers registered under false names to orchestrate their schemes. The regulator said it was important for the public to understand that the FPI investment 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 Demat account with a SEBI-registered broker/trading member and DP respectively," the regulator said, adding that it has not granted any relaxations to FPIs regarding securities market investments by Indian investors.
Sebi has urged investors to exercise caution and steer clear of any social media messages, WhatsApp groups, Telegram channels, or apps claiming to facilitate stock market access through FPIs or FIIs registered with the regulator. "Such schemes are fraudulent and do not have SEBI's endorsement."