Sebi Warns Investors Against Fake STT Notices, Highlights Market Scams

Securities and Exchange Board of India (Sebi) Warns Investors Against Fake Notices

In a notice issued on Thursday, 23 February, the Securities and Exchange Board of India (Sebi) cautioned investors against fake notices demanding payment of Securities Transaction Tax (STT). The market regulator clarified that it does not issue notices to investors for the remittance of STT, nor does it coordinate with the Reserve Bank of India (RBI) for such collections. STT is automatically levied on every purchase and sale of securities executed on stock exchanges and is collected directly by brokers.

Sebi observed cases where entities impersonate Sebi officials, misuse names and designations, and create fake email IDs resembling those of the regulator. National Stock Exchange (NSE) issued a similar caution against entities using Sebi's letterhead and demanding payments of STT. NSE warned investors to protect themselves from fraudsters and remain vigilant while dealing with communications fabricated to have been sent by Sebi officials.

Sebi also flagged another growing scam involving "account handling" services. In these schemes, individuals portray themselves as experts in managing trading accounts, Portfolio Management Service (PMS) providers, or fund managers, promising risk-free profits. Sebi advised investors to not trust claims of such account handlers/ fraudsters and refrain from sharing their account credentials with anyone. These account handlers/ fraudsters are not registered by SEBI and do not fall under the purview of SEBI.

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Key Figures:

• Thursday, 23 February: Date of Sebi notice
• Securities Transaction Tax (STT): Tax levied on purchase and sale of securities
• Reserve Bank of India (RBI): Central bank of India