SEBI Warns Against Fraudulent FPI Trading Schemes

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February 27, 2024

SEBI Warns Against Fraudulent FPI Trading Schemes

The Securities and Exchange Board of India (SEBI) has raised a red flag against a surge in fraudulent activities targeting investors through deceptive trading platforms. These platforms falsely purport affiliation with SEBI-registered Foreign Portfolio Investors (FPIs), enticing individuals with promises of lucrative trading opportunities.

Modus Operandi of Fraudsters

  • SEBI has received numerous complaints outlining the deceptive tactics employed by fraudsters. These individuals utilize online trading courses, seminars, and mentorship programs in the stock market, predominantly leveraging social media platforms such as WhatsApp and Telegram, alongside live broadcasts.
  • Under the guise of SEBI-affiliated FPI employees or affiliates, these scammers coax victims into downloading applications that ostensibly grant access to share purchases, IPO subscriptions, and purported ‘institutional account benefits.’ Notably, they circumvent authenticity by utilizing mobile numbers registered under false identities.

SEBI’s Clarification

  • In response to the escalating fraud, SEBI has clarified crucial points. Firstly, it emphasized that the FPI investment route is not available to resident Indians, except for limited exceptions detailed in the SEBI (Foreign Portfolio Investors) Regulations, 2019. Additionally, SEBI highlighted that there is no provision for an ‘Institutional Account’ in trading. Direct access to equity markets necessitates investors to hold a trading and Demat account with SEBI-registered brokers/trading members and depository participants, respectively.
  • Importantly, SEBI affirmed that it has not granted any exemptions to FPIs concerning securities market investments by Indian investors.

Safety Measures for Investors

  • SEBI has issued a stern advisory urging investors to exercise caution and avoid falling prey to fraudulent schemes propagated through social media messages, WhatsApp groups, Telegram channels, or apps. Investors should be wary of any claims facilitating stock market access through FPIs or FIIs registered with SEBI. These schemes lack SEBI’s endorsement and are unequivocally fraudulent.
  • In conclusion, investors are advised to remain vigilant and adhere to SEBI’s guidelines to safeguard their investments from potential fraudulent activities.

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SEBI Warns Against Fraudulent FPI Trading Schemes | Vaid ICS Institute