SEBI warns investors of fraud trading schemes offered by entities posing as FPIs

It stated that fraudsters entice victims through online trading courses, seminars, and mentorship programs in the stock market

The market regulator has warned investors of people posing as employees or affiliates of SEBI-registered Foreign Portfolio Investors (FPIs) and promising trading opportunities to people.

The regulator clarified that the FPI investment route is unavailable to resident Indians with limited exceptions.

In a press release issued on February 26, the Securities and Exchange Board of India (SEBI) stated that they have been receiving several

complaints regarding fraudulent trading platforms which falsely claim or suggest affiliation with SEBI-registered Foreign Portfolio Investors (FPIs) and claim to offer trading opportunities through FPI or Foreign Institutional Investor (FII) Sub-accounts or Institutional Accounts with special privileges.

The release said that fraudsters lure victims through online trading courses, seminars and mentorship programmes in the stock market, while leveraging social media platforms such as 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 orchestrate their schemes,” it added.

The regulator’s clarification said, “It is important for the public to understand that the FPI investment route is unavailable to resident Indians, with limited exceptions as outlined in the SEBI (Foreign Portfolio Investors) Regulations, 2019.”

It added, “There is no provision for an “Institutional Account” in trading, and direct access to the equities market requires investors to have a trading and demat account with a SEBI-registered broker/trading member and DP, respectively. SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors.”