SEBI imposes a ban on circulation of information via emails and SMSes since it says that it serves no good. It further added that such emails and SMS are fraudulent and mislead the gullible investors. At the moment, such unauthorised adviser companies are numerous. The tips circulating through such means have gone up by 15-20% over past few years, as per an analysis by SEBI.
An official release said, “Restriction on providing trading tips via SMS, email; restriction on soliciting investors by offering schemes, competition games” will now be reviewed by a regulator first.
While it said that stock market is a game of passing on money from the impatient to the patient. It further said that amid these activities, there lies a high chance of inefficiencies creeping in. The “impatient” can be misled by the fraudulent practices of these bugs on buying wrong stock.
To shield the “impatient” from the clinches of these frauds, it has reviewed its policy for the adviser authorities. It has also introduced some additional information for the investors to provide them with vivid knowledge of the topic.
Apart from this, it is planning to prohibit games, tournaments and leagues relating the securities market. It will have a re-look on the exemption from registration as an investment adviser provided to mutual fund distributors. A new consultation paper has been floated by SEBI. In it, SEBI has suggested a ban on mass circulation of free stock market tips. Insider news will not flow through these means to investors from now on.
SEBI norms
A proper warning will be included in the advertisement code and SEBI norms while giving info about the product. Further SEBI would look into giving three years time to mutual fund distributors who seek to migrate as an investor adviser to enable them to obtain necessary certification.
Mostly these unscrupulous activities by unauthorised agencies aim at influencing the purchase/sale of a particular stock to bring things in their own stride. Or the purpose is to exploit the investors by making them paid customers of their agency for long time advice.
