NSE cautions brokers, investors against unsolicited messages
Leading stock exchange National Stock Exchange (NSE) has cautioned traders and investors against unsolicited messages being circulated by unregistered entities to induce investment and sale of shares. Earlier, the BSE had also issued a similar message to investors.
The direction comes after the bourses and capital market regulator, the Securities and Exchange Board of India (Sebi), noticed that “unsolicited messages are being sent to induce investment or sale of the stock of certain listed companies, indicating target prices by unregistered or unauthorised entities”.
“Trading members are requested to advise their clients to remain cautious on such unsolicited messages being circulated by unregistered or unauthorised entities,” the NSE said in a notice.
The exchange also said that in case the trading member “suspects that there is an unusual trading pattern” by any client, then it should release the payout only after carrying further scrutiny of KYC documents to compare income range declared and the value of such transactions.
The trading member should also scrutinise whether the client is an individual or a private corporate body and directly or indirectly connected to the company or promoters or directors of the firm. The method of acquisition of shares by the client and whether the source of funds and period of holding is in line with the client's usual behaviour should also be inspected by the trading member.
The trading member should intimate the decision to withhold the payout to the client along with the rationale to the stock exchange within three days of withholding of payout, the exchange said.
Last week, an official had said that the Sebi would look into the complaints of some individuals allegedly circulating key financial details and other information about listed companies on social media groups before they were made public.
The regulator would also seek clarification from the brokerages and listed firms if such individuals were found to be associated with them, the official said.
The information about the listed companies are mostly being circulated through text messages, WhatsApp chats and various social media platforms, wherein names of some established brokerage houses and exchanges are also being misused.
The official also said that while the Sebi had already taken action in several such cases so far, it was investigating a number of others involving similar activities.
The direction comes after the bourses and Sebi noticed that unsolicited messages are being sent to induce investment or sale of the stock of certain listed firms