Sebi cautions investors against fake notices demanding STT payments

Synopsis

Sebi warns investors about fake notices demanding Securities Transaction Tax payments. Fraudsters are using forged Sebi letterheads to deceive people. The market regulator clarifies it does not issue such notices. Investors are urged to verify all communications. Sebi also cautions against unregistered individuals promising risk-free profits and handling trading accounts. Investors should check Sebi registration before investing.

Capital markets regulator Sebi on Thursday cautioned investors against fake notices being circulated in its name, demanding payments of Securities Transaction Tax.

The market watchdog further stated that fraudsters are sending fake notices, forging the regulator's letterhead and requesting payments for outstanding STT amounts.

"It has come to the notice of SEBI that certain fraudsters have circulated notices requiring compliance with Securities Transaction Tax (STT) under the Finance Act, 2004," the Securities and Exchange Board of India (Sebi) said in a statement.

The regulator said that investors are being made aware that these notices have not been issued by Sebi.

"It is being informed that STT is levied on every purchase and sale transaction of securities executed on stock exchanges, and the tax is collected by the broker," it added.

Sebi clarified that it does not issue notices to remit STT amounts nor does it coordinate with the Reserve Bank of India (RBI) on the same.

The regulator also warned against instances of fraudsters impersonating identities of Sebi officials, or misusing the markets watchdog's logo, seal or letterhead to deceive investors.

Such individuals have been sending forged communications, emails, or notices in Sebi's name, urging gullible investors to transfer money to these fraudulent accounts, leading to financial losses, as per the release.

"...the public is urged to exercise caution and verify the authenticity of letters/ notices demanding information or payment on behalf of Sebi," the release said.

In a separate release on Thursday, Sebi warned investors against fraudsters posing as account handlers or fund managers who promise risk-free profits in the stock market.

Sebi said these entities claim to provide portfolio or account handling services, often demanding access to investors' trading account credentials while charging a share of profits. However, losses are borne entirely by investors, the regulator said.

The regulator explained that such persons are not Sebi-registered and operate outside its purview. It urged the investors not to trust claims of such account handlers/ fraudsters and to refrain from sharing their account credentials with anyone.

"Investors are advised to verify the status of registration of entities with Sebi... before investing and to carry out transactions only through authentic trading apps of Sebi-registered intermediaries," the regulator said.

The markets watchdog said the advisory aims to protect investors about the frauds and scams being carried out by unregulated entities.

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