Sebi warns investors about stock 'games', virtual trades

MUMBAI: Markets regulator Sebi on Monday issued a warning to investors — its third this year — about unauthorised entities trying to engage investors through platforms and apps that could lead to losses. The proliferation of financial frauds is prompting Sebi to issue frequent advisories and warnings to investors.

The advisory said that some apps/web applications/ platforms were offering virtual trading services, paper trading, fantasy games, etc, to the public based on stock prices of listed companies. Such activities are in violation of Sebi’s laws and regulations, which are “designed to protect investors”.

This was a follow-up advisory from the regulator of its Aug 2016 one. At that time, Sebi had warned investors against leagues/schemes/ competitions related to securities markets, which might involve distribution of prize monies. “It is reiterated that the public can invest and undertake trading activities in the securities markets only through/with registered intermediaries. Participation in unauthorised schemes, including sharing of confidential and personal trading data, is at the investors’ own risk, cost and consequences,” since these schemes/ platforms are not registered with the regulator, it said.

In Feb, Sebi had warned investors against fraudulent trading schemes that offered investors residing in India to enjoy the same benefits enjoyed by foreign institutional investors. Sebi had warned that fraudsters were 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. These operations often use mobile numbers registered under false names to or chestrate their schemes”. Sebi told investors that the FPI route is not available to resident investors, except under certain specific conditions. Also all investors should have a demat account to invest in shares in India, it had said.


Through another advisory in Feb, Sebi had warned investors that some unscrupulous entities were falsely claiming to be registered with the regulator and promising assured and high returns to investors on their investments.
Sebi cautioned investors against placing their money with any entity based on such claims. “Investors are urged to conduct due diligence and verify the registration status of any entity claiming to be a Sebi-registered intermediary. It is imperative for investors to understand that investments offering high returns usually involve high risk including fraud risk and there can be no guarantees of assured returns in the securities market,” the advisory said.