MUMBAI — The Securities and Exchange Board of India (SEBI) on Monday warned
investors against performing transactions on unregistered online platforms.
The markets regulator said that unregistered online
platforms are offering unlisted debt securities to investors.
“Such platforms appear to provide an avenue for investors
to acquire unlisted debt securities. These platforms are not subject to any
regulatory or supervisory oversight, and lack basic investor protection or
investor grievance redress mechanisms,” SEBI said in a statement.
The activities undertaken by the unregistered online
platforms or issuers of the unlisted debt securities are in violation of
Companies Act, 2013, SEBI Act, 1992, SEBI (Prohibition of Fraudulent and Unfair
Trade Practices relating to Securities Market) Regulations, 2003 and SEBI
(Issue and Listing of Non-Convertible Securities) Regulations, 2021.
This violation occurs because offering unlisted
securities to more than 200 investors makes it a “deemed to be public issue”
under Companies Act, 2014. These activities could result in legal, regulatory
or enforcement action against those involved in such activities.
SEBI recommended investors to not engage with such
platforms.
Recently, SEBI issued an interim order against some
entities operating such unregistered platforms.
“Investors should consider utilising Online Bond
Platforms operated by SEBI registered stock brokers authorised by the Bombay
Stock Exchange (BSE) and/or the National Stock Exchange (NSE) to act as online
bond platform providers (OBPPs) for investing in listed debt securities,” the
markets regulator emphasised.
SEBI is issuing this caution, advising investors to not
engage with or undertake investment or trading activities through un-registered
intermediaries, web applications, platforms and apps.
The regulator also said that these platforms are neither
authorised nor recognised, and investors engaging in such activities would not
be entitled to essential protections, such as investor protection under SEBI's
or stock exchanges' jurisdiction, access to grievance redressal mechanisms
administered by exchanges and dispute resolution services offered by authorised
entities.
