The National Stock Exchange (NSE) has cautioned investors against illegal trading platforms which offer 'dabba trading' with guaranteed returns.

Dabba trading in India is an illegal form of trading in shares that allows investors to buy and sell stocks outside the stock exchanges.

The NSE warning comes after India's biggest stock exchange found that the entities—Shri Parasnath Commodity Pvt. Ltd., Shri Parasnath Bullion Pvt. Ltd., Faary Tale Trading Pvt. Ltd., and Bharat Kumar (associated with Trade with Trust)—were providing a dabba or illegal trading platform with assured returns.

Investors are cautioned and advised not to subscribe to any such scheme or product offered by any person or entity offering guaranteed returns in the stock market as the same is prohibited by law, the NSE says.

The exchange adds that these persons are not registered either as members or authorised persons of any registered member of the NSE. A police complaint has also been lodged in this regard.

"Investors are cautioned and advised not to trade on such illegal trading platforms. Participation in such illegal platforms is at the investor's own risk, cost, and consequences, as such illegal trading platforms are neither approved nor endorsed by the exchange," the NSE says.

For any kind of dispute relating to such prohibited schemes, mechanisms such as investor protection under the exchange's jurisdiction, exchange dispute resolution mechanisms, and investor grievance redressal mechanisms administered by the exchange would not be available to investors, it adds.

SEBI crackdown on misleading ads

Last week, market regulator Securities and Exchange Board of India (SEBI) issued a code of conduct to be followed by investment advisers and research to crack down on misleading ads.

SEBI prohibited investment advisers from using superlative terms such as 'Best', 'No. 1', 'Top adviser', 'Leading', 'One of the best amongst market leaders', among others in any form of advertisement.

The market watchdog has barred investment advisers from making promises or guaranteeing assured or risk free return to the investors. It also prohibited statements which are false, misleading, biased or deceptive, based on assumptions or projections.

"The advertisement shall not imply any assured returns or minimum returns or target return or percentage accuracy or service provision till achievement of target returns or any other nomenclature that gives the impression to the client that the investment advice/recommendation of research report is risk-free and/or not susceptible to market risks and/or that it can generate returns with any level of assurance," SEBI said in its circular.

SEBI also banned investment advisers from referring to any report, analysis, or service as free, unless it actually is free and without condition or obligation.

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