The Securities Exchange Bureau of India (SEBI) makes a ban on Short Messaging Service (SMS) and Emails for circulating tips on Stock market which does not seem to make much impact.

An internal analysis which was made by SEBI shows the circulation tips via mobile messaging application has increased up to 15 to 20 percent over the past few years. The rise in such instance has lead to making the regulatory action against bulk messages.

“After the order, the intent was to curb the menace of this market malpractice, but such instances have increased. There is a need to review the strategy to tackle those,” said an official.

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The messages are sent to the investors with intra-day tips and inducing claims that invite the prospective investor to make an investment. Right now there are many unauthorized companies which make false advice on stocks and provide free recommendations to investors.

The circular said, “Restriction on providing trading tips via bulk SMS, email, etc. and restriction on soliciting investors by offering schemes/competitions/games/leagues/etc. Related to securities market and covering these activities under the advertisement code as well as under SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.”

Once the Securities Exchange Bureau of India takes an action, these unofficial consultants need to shut their companies, or they may face legal action. Earlier in August, the SEBI has issued a warning to the investors to not to involve in schemes, leagues, competitions and games related to security markets.

Companies such as Indian Trading League which was endorsed by Cricketer Kapil Dev and Stock Race are running contests and offers gifts which worth Rs. 10 lakh to the investors for participation. On the other hand, Stock Race also gives Mercedes-Benz cars, Harley Davidson bikes, Apple products and gold coins.

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In the month of August, SEBI cautioned investors about online platforms through private placement companies. “Only recognized stock exchanges provide a platform where equity and other securities issued by companies are listed and traded by the provisions of the SCRA,” it added.

Once the SEBI’s new regulation was implemented in a place such as games, contests which are especially gamble that would be banned in India.