Sebi warns investors about stock ‘gaming’, virtual trading

MUMBAI: The markets regulator to myself on Monday issued a warning to investors — its third this year — about unauthorized entities trying to attract investors through platforms and programs that could lead to losses. The prevalence of financial fraud has prompted Sebi to issue frequent advisories and warnings to investors.
The notice said that some applications/web applications/platforms offered virtual trading, paper trading, fantasy games etc. services to the public based on the stock prices of listed companies. Such activities are in violation of Sebi’s laws and regulations, which are “designed to protect investors”.
This was further advice from the regulator in August 2016. At that time, Sebi cautioned investors against leagues/schemes/competitions related to securities markets that may involve distribution of prize money. “It is reiterated that the public can invest and trade in securities markets only through registered intermediaries. Participation in unauthorized schemes, including the sharing of confidential and personal trading data, is at the investors’ own risk, expense and consequences,” as these schemes/platforms are not registered with the regulator, the statement said.
In February, Sebi warned investors against fraudulent trading schemes that offered investors resident in India the same benefits as foreign institutional investors. Sebi warned that fraudsters are luring victims “through online trading courses, seminars and stock market mentoring programs using social media platforms such as WhatsApp or Telegram, as well as live streaming. Posing as employees or affiliates of Sebi-registered FPIs, they trick individuals into downloading apps that purportedly allow them to buy shares, subscribe to IPOs and enjoy “institutional account benefits” — all without the need for a formal trading or demat account. These operations often use mobile numbers registered under fictitious names to set up schemes.” Sebi has informed investors that the FPI route is not available to resident investors except under certain special conditions. Also, all investors should have a demo account to invest in stocks in India, it said.

Through another advisory in February, Sebi warned investors that some unscrupulous entities were falsely claiming to be registered with the regulator and promising investors guaranteed and high returns on their investments.
Sebi has cautioned investors against placing their money in any entity based on such claims. “Investors are urged to do their due diligence and verify the registration status of any entity claiming to be a Sebi-registered intermediary. Investors need to understand that investments that offer high returns are usually associated with high risk, including the risk of fraud, and there can be no guarantees of guaranteed returns in the securities market,” the statement said.