Sebi warns investors against schemes offering prize money

Market regulator says such schemes are neither endorsed nor approved by it or recognised stock exchanges

The Securities and Exchange Board of India (Sebi) has warned investors not to participate in securities-related schemes involving prize monies. “Participation in such schemes including sharing of confidential and personal trading data is at investors’ own risk... as such schemes are neither approved nor endorsed by Sebi or its recognised exchanges,” Sebi said in a press release on Tuesday.

The Sebi note has come in the wake of reports that some entities were soliciting investors for such schemes.

Sebi also advised investors to take well informed investment decisions and not to trade in the securities markets based on the tips/recommendations provided by unregistered investment advisers. Sebi has also clarified such schemes would not come under Sebi's investor protection laws, should any disputes arise.

It also noted certain electronic platforms were facilitating fund-raising on digital platforms such as websites and other internet platforms, which are similar to the platforms of stock exchanges. Notably, these platforms are not recognised under any law governing the securities market. “The electronic platforms are allegedly facilitating 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 the provisions of Securities Contract (Regulation) Act, 1956, and the Companies Act, 2013. Only recognised stock exchanges provide a platform where equity and other securities issued by companies are listed and traded in accordance with the provisions of the SCRA,” Sebi added.