SEBI Warns Investors of Fraudulent Trading Scheme: Cautionary Advisory Issued

SEBI has issued a warning about a deceptive trading scheme aimed at Indian residents, falsely associated with SEBI-registered Foreign Portfolio Investors (FPIs). Numerous complaints have been received by SEBI regarding this scheme’s alleged connection with registered FPIs.

Fraudulent tactics include luring victims through online trading courses, seminars, and mentorship programs. False promises, such as institutional account benefits, are used to entice individuals.

SEBI cautions investors to be wary of claims suggesting access to the stock market through FPIs. The advisory emphasizes that the FPI investment route is generally not available to resident Indians, except for limited exceptions outlined in the SEBI (Foreign Portfolio Investors) Regulations, 2019.

The fraudulent schemes employ online platforms like WhatsApp or Telegram, posing as SEBI-registered FPI employees. They encourage individuals to download apps claiming to offer trading opportunities and institutional account benefits without a legitimate trading account. These schemes often use fake names and phone numbers.

It’s essential to understand that there is no provision for an “institutional account” in trading, and direct access to the equities market requires a valid trading and demat account with a SEBI-registered broker or trading member. SEBI stresses that no relaxations have been granted to FPIs regarding securities market investments by Indian investors.

Investors are strongly urged to 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. Such schemes are fraudulent and lack SEBI’s endorsement. SEBI advises investors to verify the legitimacy of investment opportunities and only engage with SEBI-registered entities for their financial activities.

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