The Securities and Exchange Board of India (SEBI), which oversees the markets, has warned investors once again about the rise in illegal firms providing financial services via platforms and applications.
This is SEBI’s third warning of the year, highlighting the dangers of using unregistered services that could result in losses.
According to the most recent alert, several apps and websites encourage paper trading, virtual trading, and fantasy games that are based on the stock prices of publicly traded businesses.
In an advisory published earlier in August 2016, the market regulator cautioned investors against participating in securities market leagues, schemes, or tournaments that could involve prize money distribution.
“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 and platforms are not registered with the regulator,” it said.
Another advisory warning on fraudulent trading schemes that target Indian investors was released by SEBI earlier this year in February.
Fraudsters were allegedly exploiting social media and live sessions to trick people by promising benefits that were comparable to those received by international institutional investors.
The regulator clarified that domestic investors are not permitted to use the FPI method unless certain particular conditions are met, stating that these schemes frequently involve fictitious claims and mobile phones registered under fraudulent names.
“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.
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