SEBI Warns Against Unregulated Platforms Facilitating Trade in Unlisted Securities

Market regulator Securities and Exchange Board of India (SEBI) has warned investors against electronic platforms and websites which are facilitating transactions in unlisted securities of public listed companies. It suggested investors to not engage with them.

The regulator said that any engagement with the unregulated entities is a violation of SEBI rules. Such activities are in violation of Securities Contract (Regulation) Act, 1956 and SEBI Act, 1992 which are, inter alia, laws designated to regulate and protect the interest of investors.

“Investors  are  advised  not  to  conduct  any  transactions on  such  electronic platforms or shareany  sensitive  personal  details on  the  same as  these platforms are neither authorized nor recognized by SEBI,” it said in a statement to investors.

SEBI referred to a previous press statement, from 2016, when it had warned investors from interacting with such platforms. "It has come to the notice of SEBI that various entities are soliciting investors by offering leagues/schemes/competitions etc. related to securities markets. Some of the schemes may involve distribution of prize monies. Participation in such schemes including sharing of confidential and personal trading data is at investors’ own risk, cost and consequences as such schemes are neither approved nor endorsed by SEBI / SEBI recognized Exchange(s)," the 2016 circular said.

In 2016, the regulator had also cautioned against interacting with platforms that facilitate investment in the form of private placement with companies, as the offer is open to all the investors registered with the platform amounting to a contravention of SEBI norms. It had also warned against dealing with unregistered investment advisors and research analysts.

In the recent statement, SEBI advised to not share any sensitive personal details on such platforms which are neither authorized nor recognized by SEBI.

“Only recognized stock exchanges are authorised to provide a platform for fund raising  and  trading  in  securities  of  “to  be  listed”  and  “listed”  companies,” it said. The details of SEBI recognized stock exchanges are available on the SEBI website.