SEBI cautions investors about ‘innovative concepts’

MUMBAI:   Securities market regulator SEBI has cautioned investors about new types of risk emanating from ‘innovative concepts’ such as trading leagues, schemes, and competitions, besides unauthorised electronic platforms.
Absence of recourse
In a caution note, SEBI said participation in such schemes could compromise their trading data and personal information and result in losses, besides the absence of recourse to investor protection under SEBI regulations.
SEBI warned that the cost and consequences was solely on the investor and that such schemes were neither approved nor endorsed by the regulator or its recognised exchanges.
Explaining further, SEBI said it was issuing this caution to investors to warn about such schemes offered by third party or group companies/associates of stock brokers and the like. Investors who enter into any agreement or MoU with such entities will not be able to avail of investor protection under SEBI/exchange jurisdiction, exchange dispute resolution mechanism or the grievance redressal mechanism administered by exchanges, SEBI explained.
Unauthorised e-platforms
On unauthorised electronic platforms facilitating fund-raising, SEBI cautioned investors that platforms similar to stock exchanges such as websites and other Internet platforms were neither authorised nor recognised under any law governing the securities market.
“ The electronic platforms are allegedly facilitating investment in the form of private placement with companies, as the offer is open to all investors registered with the platform amounting to a contravention of the provisions of the Securities Contract (Regulation) Act, 1956 (SCRA), and the Companies Act, 2013.
“Only recognised stock exchanges provide a platform where equity and other securities issued by companies are listed and traded in accordance with the provisions of the SCRA,” SEBI said.
Stock tips
Finally, SEBI also cautioned the public not to get attracted by stock tips from unregistered investment advisors/analysts being circulated through SMS, public media, including websites and social networking media.

Leave a Reply

Your email address will not be published. Required fields are marked *