Sebi Warns Investors Against ‘Fake’ FPI And FII Related Schemes

The Indian securities market is seeing increased participation with the number of 20 crore (200 million) demat accounts, with an estimated 13 crore (130 million) unique investors and approximately 4.8 crore (48 million) active investors.

Along with a rise in participation, incidences of illegal trading practices and other frauds have also increased. The capital market regulator Securities Exchange Board of India (Sebi) has also urged investors against falling for fraudulent trading schemes that claim to be offered by Foreign Portfolio Investors.

On August 23, the market regulator issued an advisory, warning investors to be cautious while dealing with social media messages that seek to offer access to the stock market vis-a-vis Foreign Portfolio Investors (FPIs) and Foreign Institutional Investors (FIIs).

“Sebi advises investors to exercise caution when dealing with social media messages, WhatsApp groups, Telegram channels, or apps claiming to offer stock market access through Foreign Portfolio Investors (FPIs) or Foreign Institutional Investors (FIIs),” according to a press statement issued by Sebi.

The capital market regulator added that such schemes are fraudulent in nature and are not endorsed or regulated by the Sebi. Citing certain examples of such frauds, Sebi listed out several claims such fraudsters make.

Some of the claims include:

1) Institutional trading account

2) IPOs at a discounted price

3) Guaranteed allotment in IPO

4) Ability to participate in the Anchor book

5) Block Trade at a discounted price

The market regulator stated in the advisory that the FPI route is not accessible for Indian residents. However, some investors can access the FPI route as per the Sebi (Foreign Portfolio Investors) Regulations, 2019.

The capital market regulator also urged investors to take up certain steps to protect themselves by using only authentic trading apps and dealing with only Sebi-registered entities.

"Always verify the registration status of entities on Sebi’s website before investing and use only authentic trading apps from Sebi-registered intermediaries," according to Sebi press statement.

The market watchdog advised investors to go to the Sebi’s investor website for checking the Do’s and Don’ts of investing to protect themselves against manipulative trading practices.

So far in 2025, the market regulator has cracked down on multiple financial influencers for not complying with Sebi norms and engaging in illegal trading practices. Earlier this year, the market watchdog took action against Asmita Patel Global School of Trading.

The market regulator also ordered the entities to disgorge Rs 53.67 crore gained through the fraudulent schemes. Other recent instances of Sebi’s crackdowns include the action it has taken against ‘Baap of Charts,’ a popular finfluencer and financial influencer Avadhut Sathe, wherein a search and seizure operation was conducted at Avadhut Sathe Trading Academy (ASTA) amid allegations of providing unregistered advisory services and promoting illiquid penny stocks.