Investors should be wary of fraudulent notices requesting payment of securities transaction tax (STT), according to the Securities and Exchange Board of India (Sebi).
The market watchdog claimed in a notice released on Thursday that certain organizations were using the authority granted by the Sebi Act of 1992 to forge Sebi’s letterhead and seek repayment of unpaid STT amounts under the Finance Act of 2004.
The regulator made it clear that it neither works with the Reserve Bank of India (RBI) nor sends out notices to investors requesting the repatriation of STT. According to the regulation, STT is automatically assessed on all securities purchases and sales made on stock exchanges and is gathered straight from brokers.
The market watchdog has also seen instances of organizations using names and titles improperly, impersonating Sebi staff, and fabricating email addresses that mimic the regulator’s.
A similar warning about organizations using Sebi’s stationery and requesting STT payments was issued by the National Stock Exchange on February 24.
In the alert, the NSE warned investors to be on the lookout for scammers and to exercise caution when responding to communications purporting to be from Sebi officials and senders requesting payment on Sebi’s behalf.
Sebi also reported another expanding fraud involving “account managing” services. These schemes promise risk-free earnings by having people pose as fund managers, portfolio management service (PMS) providers, or trading account managers.
These operators usually want a portion of the profits from trades made in the investor’s trading or demat account, along with a minimum capital requirement. They display profitable trades made for other customers in order to foster trust. Investors can then manage the account directly after being convinced to divulge their trading credentials. The investor bears all losses, but returns, if any, are shareable.
“Investors are cautioned not to share their account passwords with anyone and to not believe claims made by such account handlers or scammers. “SEBI does not have any registration for these account handlers or fraudsters, and they are not under its jurisdiction,” the regulator stated.
