What is the new FPI fraud SEBI has warned investors against

The SEBI said it has received many complaints where fraudsters are enticing victims through online trading courses, seminars, and mentorship programmes in the stock market, leveraging social media platforms like WhatsApp or Telegram, as well as live broadcasts.

These scamsters are posing as employees or affiliates of SEBI-registered FPIs, and coaxing 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 the fraudulent schemes, SEBI, said.

What has SEBI clarified?

The market regulator clarified that the FPI investment route is unavailable to resident Indians, with limited exceptions as outlined in the SEBI (Foreign Portfolio Investors) Regulations, 2019.
“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 depository participant (DP) respectively,” the regulator said.

SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors.

What should investors do to stay safe?

SEBI has urged investors to exercise caution and to steer clear of any social media messages, WhatsApp groups, Telegram channels, or apps claiming to facilitate stock market access through FPIs or FIIs registered with SEBI.
Such schemes are fraudulent and do not have SEBI’s endorsement, the regulator said.