The Securities and Exchange Board of India (SEBI) has cautioned investors against engaging with unauthorized platforms facilitating transactions in unlisted securities of public limited companies. In a press statement issued on December 9, SEBI highlighted that such activities violate the Securities Contract (Regulation) Act, 1956, and the SEBI Act, 1992—laws designed to safeguard investor interests in the securities market.
Reiterating its 2016 warning, SEBI stated that these platforms solicit investors through schemes, competitions, or leagues related to securities markets, often involving prize distributions. However, these activities are neither authorized nor endorsed by SEBI or SEBI-recognized exchanges, putting participants at significant risk.
The regulator emphasized that such schemes might also involve collecting sensitive trading data, advising investors to exercise caution. Sharing personal or confidential details on unauthorized platforms could lead to adverse financial consequences, SEBI warned.
Further, SEBI reaffirmed that only recognized stock exchanges are authorized to offer fundraising and trading platforms for securities of listed or to-be-listed companies. Investors are encouraged to refer to the SEBI website (www.sebi.gov.in) for details of authorized exchanges.
In its earlier advisory, SEBI had also cautioned against unregistered investment advisors and research analysts, as well as platforms facilitating fundraising disguised as private placements. These practices breach SEBI’s regulations and expose investors to significant risks.
The regulator’s latest statement underscores its commitment to ensuring market transparency and protecting investors from unauthorized activities. SEBI advises market participants to verify the legitimacy of platforms before engaging in any securities-related transactions.
Investors are urged to remain vigilant and prioritize their security by dealing only with SEBI-recognized entities to safeguard their financial interests.
