PR No.32/2024
Caution to Public
It has come to the notice of Securities and Exchange Board of India (SEBI) that unregistered online platforms, inter alia, are offering unlisted debt securities to investors.
Such platforms appear to provide an avenue for investors to acquire unlisted debt securities. These platforms are not subject to any regulatory or supervisory oversight, and lack basic investor protection or investor grievance redress mechanisms.
The public is urged to exercise caution in undertaking transactions on such unregistered platforms. The activities undertaken by the unregistered online platforms or issuers of the unlisted debt securities are in violation of 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 violation occurs because offering unlisted securities to more than 200 investors makes it a “deemed to be public issue” under Companies Act, 2014. These activities could result in legal, regulatory or enforcement action against those involved in such activities.
Recently, SEBI issued an interim order against some entities operating such unregistered platforms. The order is accessible at https://www.sebi.gov.in/enforcement/orders/nov-2024/interim-ex-parte-order-in-the- matter-of-unregistered-online-bond-platforms 88552.html.
Investors should consider utilising Online Bond Platforms operated by SEBI registered stock brokers authorised by the Bombay Stock Exchange (BSE) and/or the National Stock Exchange (NSE) to act as online bond platform providers (OBPPs) for investing in listed debt securities. The list of BSE and NSE authorised OBPPs can be found in the link https://www.sebi.gov.in/online-bond-platform-providers.html.
SEBI is issuing this caution, advising investors to not engage with or undertake investment or trading activities through un-registered intermediaries/ web applications/ platforms / apps. The investors may note that for any kind of disputes relating to such activity, none of the following recourses will be available to investors:
- Benefits of investor protection under SEBI/ Exchange(s) Jurisdiction including SCORES.
- Investor grievance redressal mechanism administered by Exchange(s)or the online dispute resolution mechanism administered by Exchanges/Depositories (smartodr.in).
Public is invited to share details of any unregistered entities/ platforms offering unlisted debt securities via the Market Intelligence (MI) portal of SEBI at: https://mi.sebi.gov.in/
Mumbai
December 05, 2024
