A trading app may look professional, an investment group may display impressive profits, and an adviser may claim to be registered with the government. However, none of these claims proves that an investment offer is genuine. Investors need to verify who operates a platform, whether the person providing advice has the required registration and what regulatory protection actually covers.
The Securities and Exchange Board of India (SEBI) protects investors by regulating India's securities market, supervising market intermediaries, requiring disclosures and taking action against market misconduct. Its regulatory work also addresses risks associated with online trading, misleading investment promotions, fake trading applications and unauthorised investment advice.
SEBI registration is an important safeguard because it makes covered market participants accountable to regulatory requirements. However, it does not guarantee investment returns, eliminate market risks or automatically establish that every person using a registered entity's name is genuine.
This guide explains SEBI's investor protection responsibilities, how to verify investment platforms, what to do when an online investment scam occurs and how to use SEBI's complaint and dispute-resolution mechanisms.
What Is SEBI and What Is Its Role in Investor Protection?
SEBI stands for the Securities and Exchange Board of India. It is the statutory regulator responsible for protecting investors in securities, promoting the development of the securities market and regulating its operations.
SEBI was initially established in 1988 and became a statutory body on 30 January 1992 under the Securities and Exchange Board of India Act, 1992.
Section 11 of the SEBI Act, 1992 defines its principal responsibilities. These include protecting investors, developing the securities market and regulating market activities.
SEBI's work covers more than issuing warnings about fraudulent investment schemes. It establishes requirements for stock exchanges, brokers, investment advisers, research analysts, mutual funds and other entities involved in securities-market activities.
Its investor protection responsibilities can be understood through three connected areas:
- Regulation: Establishing rules for securities-market participants, investment services and market operations.
- Supervision: Monitoring regulated entities and examining whether they comply with applicable requirements.
- Enforcement: Investigating suspected violations and taking regulatory action against misconduct within its legal powers.
Investors can explore SEBI's institutional responsibilities through its official About SEBI section.
Which Investment Activities and Institutions Does SEBI Regulate?
SEBI oversees different participants and activities within the securities market. The regulatory requirements depend on the type of entity, the service it provides and the relevant securities-market regulations.
| Category | Examples | Why SEBI regulates it |
|---|---|---|
| Stock market intermediaries | Stock brokers, investment advisers and research analysts. | To establish registration, conduct, disclosure and compliance requirements. |
| Investment management | Mutual funds, asset management companies and portfolio managers. | To regulate investment management activities and protect investors using these services. |
| Market infrastructure | Stock exchanges, clearing corporations and depositories. | To support fair, transparent and orderly market operations. |
| Depository services | Depositories and depository participants. | To regulate the holding and transfer of securities in electronic form. |
| Securities issuance and listing | Issuers, listed companies and entities involved in public issues. | To establish applicable disclosure, listing and investor-protection requirements. |
| Other regulated market activities | Credit rating agencies, merchant bankers and other registered intermediaries. | To supervise activities that affect securities-market participants and investors. |
SEBI does not regulate every financial product, online business or investment-related service. For example, a platform offering a service outside the securities-market regulatory framework does not automatically come under SEBI merely because it accepts money or describes itself as an investment company.
Investors should identify the actual financial product and service before deciding which regulator has jurisdiction. Banking services, insurance products, pension products and securities-market services may fall under different regulatory frameworks.
SEBI's Investor website provides educational material and information about securities-market participants and investor services.
What Are SEBI's Main Responsibilities for Protecting Investors?
1. Registering and Supervising Securities-Market Intermediaries
SEBI establishes registration and operating requirements for intermediaries that provide covered securities-market services. These include stock brokers, investment advisers, research analysts and other regulated participants.
Registration helps identify the entity responsible for providing a particular service. It also brings the entity within the applicable regulatory framework, including compliance, disclosure and supervisory requirements.
For example, stock brokers must follow requirements concerning client accounts, handling of funds and securities, operational controls and investor grievances. SEBI consolidates many of these requirements in its Master Circular for Stock Brokers.
Registration does not mean that SEBI personally recommends the broker or guarantees the quality of its investment services. Investors must still check the entity's identity, regulatory status and service conditions.
2. Requiring Transparent Disclosures
Investors need reliable information before purchasing securities or selecting an investment product. SEBI's disclosure requirements help them understand relevant risks, costs, investment strategies and other material information.
For example, mutual fund schemes provide information about their investment objectives, portfolio, risk profile, expenses and other scheme-related details. Listed companies must also make disclosures under the applicable securities-market requirements.
These requirements help investors compare investment options and make decisions based on available information rather than promotional claims alone.
However, disclosure is not a guarantee of performance. Even an investment product that complies with regulatory disclosure requirements can lose value because of market conditions and investment risks.
3. Regulating Investment Advisers and Research Analysts
Investment advice and securities research can influence important financial decisions. SEBI therefore regulates covered investment advisers and research analysts under separate regulatory frameworks.
Registered investment advisers must follow requirements relating to client risk profiling, suitability of advice, disclosures, agreements and conflicts of interest. These safeguards help ensure that personalised investment advice considers the client's financial circumstances and risk appetite.
SEBI's Master Circular for Investment Advisers provides consolidated instructions for this category of intermediary.
Research analysts provide securities-related research and recommendations under their applicable framework. Investors should not assume that someone providing stock tips through WhatsApp, Telegram, YouTube or another social platform is authorised to offer regulated services.
4. Acting Against Insider Trading and Market Manipulation
Fair market operations are essential for investor confidence. SEBI has powers to investigate and act against practices that distort securities trading or provide an unfair advantage to certain participants.
Examples of prohibited or regulated misconduct include:
- Insider trading involving unpublished price-sensitive information in violation of applicable regulations.
- Fraudulent and unfair trade practices in the securities market.
- Market manipulation intended to create misleading trading activity or influence security prices.
- Misleading representations and other conduct that violates securities-market requirements.
The SEBI Act, 1992 provides the statutory foundation for several of these regulatory powers.
5. Establishing Investor Rights and Responsibilities
SEBI's Investor Charter explains the rights and responsibilities of investors when dealing with recognised market infrastructure institutions and registered intermediaries.
These rights include fair treatment, access to relevant information, quality services and time-bound grievance redressal under the applicable framework. Investors also have responsibilities, such as reading documents carefully, understanding risks and keeping records of their transactions.
SEBI's Investor Charter provides further details about these rights, responsibilities and grievance-redressal facilities.
How Can Investors Verify a SEBI-Registered Broker or Investment Adviser?
Checking registration details is one of the most important steps before using an investment service. Fraudsters sometimes copy the name, logo, registration number or website details of a genuine intermediary to make an unauthorised service appear legitimate.
Investors should independently verify the entity instead of relying on registration certificates, screenshots or details shared by an unknown person.
Steps to Verify a Securities-Market Intermediary
- Identify the actual service provider: Find the legal name of the broker, investment adviser, research analyst or other intermediary providing the service.
- Obtain its registration details: Check the registration number and intermediary category claimed by the entity.
- Visit SEBI's official website: Use the official SEBI website and its intermediary-related information to verify the registration details.
- Check the relevant stock exchange or recognised institution: For stock brokers, verify the membership and authorised trading details through the relevant exchange.
- Compare the contact information: Check the official website, registered address and contact details against the information supplied by the person approaching you.
- Check whether the service is covered: Confirm that the registration category matches the service being offered.
SEBI's Investor Support page provides links to authorised mobile applications of registered stock brokers and other intermediary-related resources.
Important: A fraudster may use a genuine broker's registration number without permission. Therefore, verifying the number alone is not enough. You must also confirm that the website, application, phone number and person contacting you are genuinely associated with the registered entity.
How Does SEBI Protect Investors From Fake Trading Apps and Online Scams?
Online investment fraud has become more sophisticated. Scammers may create fake trading applications, impersonate registered brokers, advertise unrealistic returns or use social-media groups to persuade people to transfer money.
SEBI has introduced several regulatory and awareness measures to improve transparency and help investors identify suspicious investment services.
1. Verified App Label for Eligible Stock Trading Applications
SEBI introduced a Verified App Label initiative for stock trading applications of brokers registered with SEBI on the Google Play Store. The initiative was launched on 25 March 2026 to help users distinguish authorised broker applications from fake applications that misuse genuine broker identities.
The initiative involves coordination with Google Play and uses a verification mechanism for eligible trading applications. Investors can refer to SEBI's official announcement about the Verified App Label.
This measure is useful because fake applications may copy the branding of genuine brokers and display fabricated profits or account balances.
However, investors should understand its limitations:
- The initiative applies to eligible stock trading applications covered by the verification arrangement.
- It should not be treated as a guarantee of investment performance or a recommendation by SEBI.
- A label does not remove the need to verify the broker's identity and official application details.
- Investors should remain cautious about APK files, links shared through messaging groups and applications promoted by unknown individuals.
Investors can also use SEBI's authorised mobile apps information to check the relevant stock-exchange listings.
2. Requiring Registration Details in Social-Media Promotions
Investment-related content on social media can make it difficult for users to identify whether the person providing information is a regulated intermediary, an agent or an unrelated promoter.
To improve transparency, SEBI issued a circular on 26 February 2026 concerning the disclosure of registered names and registration numbers by SEBI-regulated entities and their agents on social-media platforms.
The circular specifies disclosure requirements for covered content uploaded from 1 May 2026. The objective is to help users identify regulated entities and distinguish their official communications from misleading or unauthorised promotions.
Read the SEBI circular on social-media registration disclosures.
Investors should still verify the details independently. A person can copy a registration number or display the name of a genuine intermediary without being authorised to represent it.
3. Addressing Misleading Investment Advertisements
Misleading advertisements can create unrealistic expectations about investment returns. Some promoters use phrases such as guaranteed profit, fixed daily income, risk-free trading or assured stock-market returns to attract inexperienced investors.
SEBI's regulatory framework places conduct and disclosure requirements on covered intermediaries, including investment advisers and research analysts. These requirements restrict misleading claims and help ensure that investors receive appropriate information about risks and services.
Investors should treat guaranteed or unusually high stock-market return claims as a serious warning sign, particularly when the promoter demands money through a personal bank account or an unrelated payment channel.
4. Establishing Cybersecurity and Cyber-Resilience Requirements
Online trading and investment services depend on digital systems that process transactions, maintain customer information and support account access. A cyber incident can disrupt these services or expose sensitive information.
SEBI issued the Cybersecurity and Cyber Resilience Framework (CSCRF) on 20 August 2024 for SEBI-regulated entities. The framework establishes requirements intended to improve cybersecurity governance, risk management, system resilience and incident preparedness.
The applicable requirements depend on the category and circumstances of the regulated entity. The framework does not mean that cyberattacks or data breaches are impossible.
Read the official CSCRF circular and SEBI's CSCRF frequently asked questions.
5. Issuing Warnings About Stock-Market Fraud
SEBI regularly publishes investor warnings about fraudulent activities and misleading investment practices. These alerts help investors understand the methods used by fraudsters.
For example, SEBI issued a warning on 26 February 2026 about stock-market scams involving account-handling services. Such services may promise to manage a person's trading account, deliver assured returns or generate profits without requiring the investor to participate in trading decisions.
Investors should be especially careful when someone asks for trading credentials, account access, passwords or control over their securities account.
Read SEBI's warning about stock-market scams through account-handling services.
6. Promoting Investor Education and Financial Awareness
SEBI also works to improve financial awareness through educational material, investor guidance and public awareness campaigns.
Its investor education resources explain important topics such as investment risks, market intermediaries, fraud prevention, investor rights and complaint procedures.
Investors can access these resources through the SEBI Investor website and its caution-to-investor section.
How Can Investors Identify Fake Investment Apps and Stock-Market Scams?
Fraudulent investment platforms often follow a similar pattern. A person may first receive an advertisement or message promising exceptional returns. The promoter then builds trust through stock tips, screenshots, testimonials or a private investment group.
After gaining the investor's confidence, the fraudster may ask them to download an application, transfer money or provide access to a trading account.
SEBI's investor awareness material identifies several warning signs that people should recognise before making an investment.
Common Warning Signs of Online Investment Fraud
- Promises of guaranteed, fixed or risk-free returns from stock-market investments.
- Trading applications shared through unofficial links or APK files.
- Requests to transfer investment money to personal bank accounts or unrelated third-party accounts.
- WhatsApp or Telegram groups claiming to provide exclusive stock tips or insider information.
- Pressure to invest immediately or increase the investment amount to unlock higher returns.
- Requests for trading passwords, OTPs, account credentials or remote access to a device.
- Fake profit statements or account balances that cannot be independently verified.
- Demands for additional fees or taxes before allowing the investor to withdraw money.
SEBI has published an educational document explaining the stages of fake trading app scams. Investors can read its official guidance on fake trading app scams.
What Should You Do Before Investing Through an Online Platform?
- Verify the intermediary's registration and the service it is authorised to provide.
- Check the trading application's identity through the relevant official exchange or SEBI investor resources.
- Read the investment documents, charges and risk disclosures before committing money.
- Use only official payment channels associated with the regulated intermediary.
- Never share your trading password, OTP, account credentials or other confidential information.
- Do not allow an unknown person to operate your trading or demat account.
- Be cautious about investment recommendations received through unverified social-media groups.
What Is SEBI's Role in Investor Complaints and Dispute Resolution?
SEBI provides a regulatory framework for handling investor grievances involving entities and activities under its jurisdiction. It also supports complaint-monitoring and dispute-resolution mechanisms through recognised market infrastructure institutions and designated bodies.
Two important facilities are SCORES and the Online Dispute Resolution (ODR) mechanism. They serve related but different purposes.
1. What Is SCORES 2.0?
SCORES stands for SEBI Complaint Redress System. It is an online platform through which investors can lodge and track complaints against entities covered by the system.
SEBI introduced SCORES 2.0 in April 2024 to improve complaint handling. The upgraded system includes automatic routing of complaints to the concerned entity, time-bound responses and a review mechanism for investors who are not satisfied with the action taken.
Under the SCORES 2.0 process, the concerned entity is required to submit its Action Taken Report (ATR) within 21 calendar days of receiving the complaint. Investors can use the review mechanism within the prescribed time if they are not satisfied with the response.
Investors can access the official SCORES 2.0 portal to submit and track eligible complaints. SEBI also provides official SCORES FAQs explaining the complaint process and review stages.
2. How Can an Investor File a Complaint on SCORES?
Investors should first approach the concerned intermediary, stock exchange, depository or other relevant entity through its prescribed grievance channel. If the issue remains unresolved, they can use the applicable SEBI grievance-redressal mechanism.
The general process is as follows:
- Collect supporting records: Keep transaction statements, contract notes, account details, payment records, complaint numbers and relevant communications.
- Approach the concerned entity: Raise the issue through the intermediary's or institution's official grievance channel, where required under the applicable process.
- Open the SCORES portal: Visit scores.sebi.gov.in.
- Register or sign in: Complete the required user registration or login process.
- Submit the complaint: Select the relevant entity and complaint category, explain the issue and attach supporting documents.
- Track the complaint: Use the complaint registration number to monitor its progress and review the response.
- Use the review facility if necessary: If you are not satisfied with the response, follow the prescribed review process within the available time limits.
Not every dispute or grievance falls within SCORES. Investors should check the platform's eligibility conditions and the applicable complaint category before submitting a case.
3. What Is the Online Dispute Resolution Mechanism?
The Online Dispute Resolution mechanism provides a structured process for resolving covered securities-market disputes through online conciliation and arbitration.
It operates under the framework established by SEBI and involves recognised stock exchanges, depositories and other market infrastructure institutions. It is particularly relevant when an investor and a covered market participant have a dispute that requires a formal resolution process.
Investors should distinguish this mechanism from SCORES. SCORES provides a grievance-redressal and monitoring process, whereas ODR provides an alternative dispute-resolution route under the applicable framework.
Read SEBI's Master Circular for Online Resolution of Disputes in the Indian Securities Market.
4. Does SEBI Personally Refund Money to Every Investor?
No. SEBI's grievance and dispute-resolution mechanisms do not guarantee a refund in every case. The available remedy depends on the nature of the complaint, the evidence, the applicable regulatory framework and the outcome of the relevant process.
A complaint about a broker's failure to provide a service is different from an investment loss caused by market movements. Similarly, a fake trading app scam may involve criminal fraud rather than a dispute with a genuine SEBI-registered intermediary.
Investors should identify the nature of the problem and approach the appropriate institution or authority.
What Should You Do If You Lose Money Through a Fake Trading App or Investment Scam?
If you discover that you have transferred money to a fake trading application, impersonator or fraudulent investment group, act quickly. Do not wait for the fraudster to respond or promise a refund.
- Contact your bank immediately: Report the unauthorised or fraudulent transaction and request that the bank take the appropriate action. Keep the complaint reference number.
- Call the cyber financial fraud helpline 1930: Report the incident as soon as possible so that the complaint can enter the appropriate financial-fraud response process.
- Submit an online complaint: Use the National Cyber Crime Reporting Portal and provide the transaction details and supporting evidence.
- Preserve evidence: Keep screenshots, phone numbers, messages, payment receipts, bank statements, application details, website addresses and other relevant records.
- Secure your accounts: Change compromised passwords, contact the bank or broker and follow their instructions to secure affected accounts.
- Inform the genuine intermediary if impersonated: If a fraudster used a registered broker's name, notify the broker through its official contact details.
- Approach SEBI where appropriate: If the complaint concerns a regulated intermediary or securities-market violation, use the applicable grievance or information-reporting channel.
Important: A fake trading app may display fictional profits and balances. Do not pay additional withdrawal charges, taxes or verification fees to the same people without independently verifying the claim. Such demands may be another attempt to extract money.
For cyber financial fraud, the National Cyber Crime Reporting Portal and helpline 1930 are important reporting channels. SEBI's complaint system is not a substitute for reporting a criminal financial fraud to the appropriate authorities.
How Does SEBI Investigate Violations and Take Enforcement Action?
SEBI has statutory powers to examine suspected violations of securities laws and take regulatory action against persons or entities covered by its jurisdiction.
Depending on the nature of the matter and applicable legal provisions, its actions may include:
- Calling for information, records and documents.
- Conducting inspections, inquiries and investigations.
- Issuing directions to regulated entities and other persons where legally permitted.
- Restricting access to the securities market in appropriate cases.
- Suspending or cancelling registrations through the prescribed regulatory process.
- Imposing monetary penalties under the applicable provisions.
- Directing disgorgement of unlawful gains where the law permits.
These powers help SEBI address misconduct and maintain the integrity of the securities market. The nature of the action depends on the facts, evidence and applicable law.
SEBI's regulatory investigations are different from police investigations into criminal cyber fraud. A securities-market violation may fall within SEBI's jurisdiction, while cheating, identity theft, unauthorised access or financial cybercrime may also require action by law-enforcement agencies.
SEBI's enforcement powers are set out in the SEBI Act, 1992 and other applicable securities laws.
What Is the Difference Between SEBI, Stock Exchanges and Cybercrime Authorities?
Investors sometimes approach the wrong authority because they do not know which institution handles a particular problem. SEBI, stock exchanges, brokers and cybercrime authorities perform different functions.
| Institution | Main responsibility | When it may be relevant |
|---|---|---|
| SEBI | Regulates the securities market, supervises covered intermediaries and addresses securities-law violations. | Complaints involving regulated intermediaries, securities-market misconduct or applicable investor-protection requirements. |
| Stock exchanges | Operate trading platforms, supervise their members under applicable rules and provide investor grievance facilities. | Broker-related complaints, trading issues and other matters covered by exchange procedures. |
| Stock brokers | Provide brokerage and trading services to clients under the applicable regulatory framework. | Account access, trade execution, statements, service issues and broker-level grievances. |
| Depositories | Maintain securities in electronic form and support related depository services. | Demat account, securities holding and transfer-related issues. |
| Cybercrime authorities | Receive and investigate reported cybercrime and online financial fraud through the applicable law-enforcement process. | Fake trading apps, impersonation, online cheating, unauthorised transfers and other cyber offences. |
For online financial fraud, investors can report the incident through the National Cyber Crime Reporting Portal. For eligible securities-market grievances, they can use SCORES 2.0.
Frequently Asked Questions About SEBI and Investor Protection
Q. What Does SEBI Stand For?
Ans. SEBI stands for the Securities and Exchange Board of India. It is India's statutory securities-market regulator and is responsible for protecting investors, promoting market development and regulating the securities market.
Q. When Did SEBI Become a Statutory Body?
Ans. SEBI was initially established in 1988 and became a statutory body on 30 January 1992 under the Securities and Exchange Board of India Act, 1992.
Q. What Is SEBI's Main Role in Investor Protection?
Ans. SEBI protects investors by regulating securities-market participants, establishing disclosure and conduct requirements, supervising regulated entities, addressing market misconduct and providing grievance-redressal mechanisms.
Q. Does SEBI Regulate Every Online Investment Platform?
Ans. No. SEBI regulates entities and activities that fall within its securities-market jurisdiction. An online platform does not automatically come under SEBI merely because it offers an investment-related service. Investors should identify the product and verify the applicable regulator.
Q. How Can I Check Whether a Stock Broker Is Registered With SEBI?
Ans. Investors should verify the broker's legal name and registration details through SEBI's official resources and check its membership or authorised trading details with the relevant stock exchange. They should also confirm that the website, application and contact details actually belong to that broker.
Q. Does SEBI Registration Guarantee Investment Returns?
Ans. No. Registration does not guarantee profits, investment performance or protection from market losses. Investors must understand the risks of the investment and verify the person or entity providing the service.
Q. What Is the Verified App Label Introduced by SEBI?
Ans. SEBI introduced a Verified App Label initiative on 25 March 2026 for eligible trading applications of SEBI-registered stock brokers on the Google Play Store. It is intended to help users identify genuine broker applications and reduce the risk of downloading fake trading apps.
Q. Can SEBI Take Action Against Unregistered Investment Advisers?
Ans. Yes. Where a person provides investment-advisory services that require SEBI registration without obtaining the required registration, SEBI can examine the activity and take appropriate action under the applicable law. The exact requirement depends on the nature of the service and any applicable exemptions.
Q. What Is SCORES 2.0?
Ans. SCORES 2.0 is SEBI's upgraded online complaint-redressal system for eligible securities-market grievances. It allows investors to lodge and track complaints, receive responses and use the prescribed review mechanism if they are dissatisfied.
Q. How Many Days Does an Entity Get to Respond to a SCORES Complaint?
Ans. Under the SCORES 2.0 process, the concerned entity is required to submit its Action Taken Report within 21 calendar days of receiving the complaint. Investors should check the current portal instructions for review deadlines and other procedural requirements.
Q. Does SEBI Refund Money Lost in Every Investment Scam?
Ans. No. SEBI does not provide automatic compensation for every investment loss or online scam. The available remedy depends on the facts, the parties involved and the applicable legal and regulatory framework. Criminal financial fraud should also be reported to the cybercrime authorities and the concerned bank.
Q. Where Should I Report a Fake Trading App or Online Investment Fraud?
Ans. Report suspected financial cyber fraud immediately to your bank and call the national cyber financial fraud helpline 1930. You can also submit a complaint through the National Cyber Crime Reporting Portal at cybercrime.gov.in. If the matter also involves a regulated securities-market intermediary, use the relevant SEBI grievance channel.
Q. Can SEBI Investigate Stock-Market Manipulation?
Ans. Yes. SEBI has statutory powers to investigate suspected insider trading, fraudulent and unfair trade practices, market manipulation and other violations of securities laws. It can take appropriate regulatory action under the applicable provisions.
Conclusion
SEBI plays an important role in protecting investors and maintaining confidence in India's securities market. It regulates market intermediaries, establishes disclosure requirements, supervises market activities and acts against violations of securities laws.
Its work also extends to the changing risks of online investing. Measures such as the Verified App Label initiative, social-media disclosure requirements, cybersecurity standards and investor-awareness campaigns help strengthen accountability and improve the information available to investors.
However, regulation cannot remove every investment risk or prevent every fraud. Investors should independently verify brokers and advisers, use authorised applications, avoid guaranteed-return claims and keep records of their transactions.
If a securities-market grievance remains unresolved, the applicable exchange and SEBI complaint mechanisms can provide a route for redressal. If someone loses money through a fake trading app or online financial fraud, they should contact their bank and report the incident to the cybercrime authorities without delay.