Markets watchdog Sebi today said it has got help from telecom regulator Trai to curb fraudulent bulk SMSes that entrap gullible investors with stock tips promising huge financial gains. Trai and Sebi collaborated closely to review the existing regulatory framework and industry practices to help in reducing the vulnerability of the securities market to manipulation through misuse of mass communication device like bulk SMS, the markets regulator said in a statement.
The collaboration followed Sebi seeking attention of the Telecom Regulatory Authority of India (Trai) that has been entrusted with regulation of telecommunication services to protect interests of consumers and the public at large.
Sebi observed that there are increasing instances of bulk SMSes being sent to investors and the general public inducing them to invest in or purchase the stocks of certain listed companies, indicating target prices and giving fraudulent and misleading or false information.
According to Sebi regulations, investment advice and stock tips can only be given by investment advisors and certain other entities that are duly registered with the regulator.
“However, the main challenge faced by Sebi in this context was the lack of reliable information on the identity of senders of such SMSes, which created roadblocks for Sebi in taking necessary enforcement action against them,” the markets watchdog said.