SEBI Issues Advisory against Fraudulent Practices via FPI Route

In a recent press release, SEBI has cautioned investors against fraudulent trading platforms falsely alleging associations with SEBI-registered Foreign Portfolio Investors (FPIs). These platforms claim to provide trading opportunities to resident Indians through FPI or Foreign Institutional Investor (FII) sub-accounts or institutional accounts with purported special privileges.
 
Under SEBI (Foreign Portfolio Investors) Regulations, 2019, the FPI investment route is not accessible to Resident Indians (RIs), Non-Resident Indians (NRIs), and Overseas Citizens of India (OCIs), except in certain cases, provided they meet SEBI‘s specified conditions. SEBI emphasizes that it hasn’t granted any relaxations to FPIs regarding securities market investments by Indian investors.
 
SEBI has observed the modus operandi of such operators is to induce investors through online trading courses, seminars, and mentorship programs on the stock market, leveraging social media platforms like WhatsApp or Telegram, along with live broadcasts. These impostors, masquerading as SEBI-registered FPI employees or affiliates, persuade individuals to download applications that supposedly enable share purchases, IPO subscriptions, and access to “Institutional account benefits” without the necessity of an official trading or DEMAT account. Often, these operations employ mobile numbers registered under false identities to carry out their schemes.
 
It’s important to note that there is no provision for an “Institutional Account” in trading, and direct access to the equities market mandates investors to have a trading and DEMAT account with a SEBI-registered broker/trading member and Depository Participant (DP) respectively.
 
SEBI in the Press Release has advised investors to exercise caution and refrain from engaging with any social media messages, WhatsApp groups, Telegram channels, or applications claiming to facilitate stock market access through FPIs or FIIs registered with SEBI. Such endeavours are fraudulent and lack SEBI‘s endorsement.
 
A copy of the SEBI Press Release is enclosed herewith and also available on SEBI website.
 
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