SEBI Issues Warning to Investors Regarding Unlisted Debt Securities Trading
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Mumbai, Dec 9 (NationPress) The Securities and Exchange Board of India (SEBI) has issued a warning to investors on Monday regarding the risks of engaging in transactions through unregistered online platforms.
The market regulator pointed out that these unregistered platforms are promoting unlisted debt securities to potential investors.
According to SEBI's statement, “Such platforms seem to offer an opportunity for investors to acquire unlisted debt securities. However, these platforms operate without any regulatory oversight and do not provide essential protections for investors or mechanisms for addressing grievances.”
Moreover, the activities conducted by these unregistered online platforms or issuers of unlisted debt securities contravene the 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 infringement arises because offering unlisted securities to more than 200 investors constitutes a “deemed public issue” under the Companies Act, 2014. Such activities could lead to legal, regulatory, or enforcement actions against those involved.
SEBI strongly advised investors to refrain from engaging with these platforms.
Recently, SEBI has taken interim actions against certain entities operating these unregistered platforms.
“Investors should consider using Online Bond Platforms managed by SEBI registered stock brokers approved by the Bombay Stock Exchange (BSE) and/or the National Stock Exchange (NSE) as authorized online bond platform providers (OBPPs) for investing in listed debt securities,” the market regulator highlighted.
SEBI continues to issue this advisory, urging investors not to engage in investment or trading activities through unregistered intermediaries, web applications, platforms, and apps.
The regulator further stated that these platforms lack authorization and recognition, and investors participating in such activities will forfeit essential protections, including investor protection under SEBI's or stock exchanges' jurisdiction, access to grievance redressal mechanisms provided by exchanges, and dispute resolution services from authorized entities.
