NSE issues warning to investors regarding illegal dabba trading services

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NSE Dabba Trading Warning

Highlights

The National Stock Exchange of India has filed a police complaint regarding 'Dabba Trading' services on Facebook by 'Amit', 'Venktesh Reddy', and 'Anand Kumar'.
Under Section 23(1) of the Securities Contracts (Regulation) Act, 1956, those found guilty of illegal trading may face up to ten years imprisonment, a fine of up to Rs 25 crore, or both.
NSE has warned that investors trading on dabba trading platforms will not have access to the exchange's dispute resolution and grievance redressal facilities.

This article was translated from the original. Read the original version by our correspondent here.

Complaints, Named Individuals, and Regulatory Warning

According to the National Stock Exchange of India, it has come to the exchange's notice that individuals named “Amit”, “Venktesh Reddy”, and “Anand Kumar”, using mobile numbers “8401907771” and “7224974471”, and Facebook groups named “Dabba Trading”, are providing illegal trading services. The exchange has advised investors not to subscribe to any such scheme or product offered in the stock market by any person or entity, as it is legally prohibited.

The exchange states that its website provides a “Know/Locate your Stock Broker” facility, through which registered members and their authorized persons can be verified. It also said that the individuals mentioned are not registered members or authorized persons of the exchange. A police complaint has also been filed in this matter.

Legal Risks and Impact on Investor Protection

Under Section 23(1) of the Securities Contracts (Regulation) Act, 1956, any person or entity violating Sections 13, 16, 17, or 19 can be prosecuted. Upon conviction, the punishment may be up to ten years imprisonment, a fine of up to Rs 25 crore, or both.

The exchange has stated that as per Section 25 of the SCRA, offenses punishable under Section 23 are cognizable and can also be investigated by state law enforcement agencies. Apart from violations of securities laws, dabba trading also falls under Sections 316, 318, and 61 of the Bharatiya Nyaya Sanhita, 2023.

Investors are also warned that trading on such illegal platforms will be entirely at their own risk, cost, and consequences, as these platforms are neither approved nor supported by the exchange. In disputes related to such prohibited structures, investors will not be entitled to the dispute resolution mechanism and investor grievance redressal system available under the exchange's jurisdiction.

In our previous report, we discussed the provisional attachment of movable and immovable assets worth Rs 5.54 crore by the Enforcement Directorate related to Jeevan Suraksha Group of Companies and its directors. The investigation alleges that the group raised funds from a large number of investors by promising high returns without valid authorization and allegedly misused the money through a Ponzi-like structure; further investigation is ongoing in the matter.

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