SEBI & TRAI join hands to curb fradulent SMSs in bourses
Published: Aug 21, 2017
By TIOLCORPLAW News Service
MUMBAI, AUG 21, 2017: In view of the detrimental effect of fraudulent bulk SMSs on the integrity of markets and confidence of investors, the market regulator Stock Exchange Board of India (SEBI) sought the attention of Telecom Regulatory Authority of India (TRAI) which has been entrusted with regulation of the telecommunication services so as to protect the interest of the consumers of telecommunications service and the public at large.
TRAI and SEBI have collaborated closely to review the existing regulatory framework and industry practices to help in reducing the vulnerability of securities market to manipulation through misuse of mass communication device like bulk SMS.
TRAI has asked all Access Providers to follow certain operational guidelines for SMSs relating to investment advice or stock tips using the bulk SMS channel. SEBI believes that these directions will go a long way to curb the dissemination of fraudulent and misleading information through the bulk SMS channel.
The Regulator has noticed that there are increasing instances of bulk SMSs 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 misleading or false information.
SEBI regulation requires that investment advice and stock tips can only be given by Investment Advisors and certain other entities that are duly registered with SEBI. However, the main challenge faced by SEBI in this context, was the lack of reliable information on the identity of senders of such SMSs which created road blocks for SEBI in taking necessary enforcement action against them.