NSE issues investor warning over illegal trading services

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NSE illegal trading warning

Highlights

NSE has filed a police complaint against the Telegram channel 'Bull Eye Traders Group' for allegedly offering illegal dabba trading services.
A violation of Section 23(1) of the Securities Contracts Regulation Act, 1956 may result in up to ten years’ imprisonment or a fine of up to Rs 25 crore upon conviction.
Investors using illegal platforms will not have access to the exchange’s grievance redressal or dispute resolution facilities; the risk rests entirely with the investor.

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

Exchange action against illegal Telegram channel

According to a statement from the National Stock Exchange of India, as reported by NSE India, the Telegram channel called “Bull Eye Traders Group” is offering services that fall under the category of dabba or illegal trading outside the exchange framework. NSE said that this individual, entity, or social media platform is not registered as an exchange member or authorized person.

The exchange has asked investors not to accept any stock market-related scheme or product through any individual, entity, or social media platform without verification. NSE has made a “Know/Locate your Stock Broker” feature available on its website, through which investors can check the details of registered brokers and authorized persons.

A police complaint has also been filed in this matter. The exchange reiterated that such illegal trading platforms are neither approved by it nor operating with its support.

Legal risks and limited recourse for investors

NSE said that under Section 23(1) of the Securities Contracts Regulation Act, 1956, any individual, entity, or social media platform violating the relevant provisions may face prosecution. Upon conviction, penalties may include imprisonment of up to ten years, a fine of up to Rs 25 crore, or both.

According to the exchange, such offences are cognizable under Section 25, and state law enforcement agencies may also investigate them. Investors were also warned that the exchange’s dispute resolution system or investor grievance redressal mechanism will not be available for disputes involving such prohibited arrangements. Therefore, participation in such platforms will be entirely at the investor’s own risk, cost, and consequences.

Our previous report discussed NSE’s warning regarding the alleged offering of guaranteed returns and illegal/dabba trading services through “Sanjay,” the “Trade with Manish” YouTube channel, and app.globalcorefx.pro. The exchange had clarified that these entities are not its registered members/authorized persons and that a police complaint had also been filed. Investors were also informed of the risk of stringent penalties under the SCRA, 1956, and that the exchange’s investor protection/dispute resolution mechanisms are not available in the event of a dispute on such platforms.

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