BSE cautions market participants against unsolicited SMSes

Leading bourse BSE has asked market participants to exercise "greater caution" against unsolicited SMSes providing stock trading tips as regulators step up the vigil to prevent investors from being duped.

There are increasing instances of bulk SMSes being sent to investors and the general public, inducing them to invest in or purchase the stocks of certain listed companies, indicating target prices and giving fraudulent and misleading or false information.

Under Sebi regulations, investment advice and stock tips can only be given by investment advisors and certain other entities that are duly registered with the regulator.

In a circular addressed to market participants, BSE has asked them "to exercise greater caution with respect to tips/ rumours circulated via various mediums while dealing in the securities listed on the exchange".

SEBI, last week, announced that it has got help from telecom regulator TRAI to curb fraudulent bulk SMSes that entrap gullible investors with stock tips promising huge financial gains. TRAI and SEBI collaborated closely to review the existing regulatory framework and industry practices to help in reducing the vulnerability of the securities market to manipulation through misuse of mass communication devices like bulk SMSes.

The collaboration came as SEBI sought the attention of the Telecom Regulatory Authority of India (TRAI) on the matter.

Accordingly, TRAI directed service providers to ensure that only SEBI-registered brokers are allowed to send investment advice SMSes to their customers. Also, service providers will have to ensure that suitable arrangements are made to filter and block messages sent by telemarketers using bulk SMS channel (as promotional messages) containing securities-related keywords like buy, sell, hold, accumulate, target followed by scrip code or scrip name provided by any recognized stock exchange.

Capital markets regulator SEBI has taken action against some entities sending unsolicited stock tips in the past, while a few other such cases are under investigation.

However, it has been difficult for the regulator to check this menace as a large number of individuals and entities have been indulging in such practices, prompting SEBI to seek TRAI's help.