SEBI Circulars on Investor Protection, Cybercrime, Online Fraud and Impersonation
Table of Contents
How Market Regulators are Strengthening Safeguards and Why Compliance Partners like AiPlex Matter
There has been a rapid and unprecedented digitization of the financial ecosystem, from digitized bank services, online trading platforms, payment apps, algorithmic advisory services and a lot more.
While this innovation has expanded access to markets and made financial transaction just a matter of few clicks, unfortunately, it has also created a fertile ground for cybercrime, fraud, miscommunication, and impersonation at scale.
The Securities and Exchange Board of India (SEBI), India’s apex regulator of India’s securities markets, has responded with multiple circulars, advisories, and frameworks aimed at protecting investors from these evolving threats.
These regulatory measures not only protect investor interests but also impose compliance requirements on regulated entities and intermediaries operating in the digital space.
We will very briefly explore and understand:
- Key SEBI circulars and advisories on investor protection
- Cybercrime and online fraud prevention directives
- Guidelines on fraud communication and impersonation
- Implications for intermediaries and brands
- How compliance partners like AiPlex can help protect brands, intermediaries, and investors
SEBI’s Mandate on Investor Protection
What SEBI Aims to Protect
SEBI’s statutory mandate is to promote investor protection, ensure fair and transparent markets, and foster confidence among participants in India’s capital markets.
Investor protection under SEBI covers:
- Preventing unauthorized or fraudulent investment schemes
- Guarding against cyber-enabled financial fraud
- Ensuring accurate, verifiable communications
- Minimizing identity impersonation and misrepresentation
- Strengthening complaint redressal and market surveillance
Through circulars and public releases, SEBI provides a regulatory roadmap for intermediaries and investors to identify and mitigate financial fraud risks.
SEBI Circulars Addressing Cybercrime
Cybercrime threats against financial institutions, intermediaries, and investors have substantially increased as markets and communications move online.
SEBI has responded with a consolidated cybersecurity framework:
Cybersecurity and Cyber Resilience Framework (CSCRF)
Circular: SEBI/HO/ITD-1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024
Purpose: To establish a comprehensive cybersecurity and resilience framework for all SEBI-regulated entities (REs).
Coverage: Stockbrokers, depositories, mutual funds, AMCs, portfolio managers, investment advisors, research analysts, custodians, AIFs, RTAs, and more.
Securities and Exchange Board of India
Key Requirements under CSCRF:
- Governance structures, including the appointment of a Chief Information Security Officer (CISO)
- Risk identification and threat monitoring
- Protection mechanisms, including access control, encryption, and patch management
- Detection systems and continuous monitoring
- Incident response and disaster recovery processes
- Periodic cyber audits and compliance reporting
The CSCRF framework is structured to ensure that regulated entities are prepared to anticipate, withstand, contain, recover from and evolve with cyber threats. Ascentium
Implementation and Clarifications:
SEBI has also issued clarification circulars on CSCRF compliance (e.g. April 30, 2025, and subsequent technical clarifications) to help entities interpret CSCRF requirements, categorize entities, and formulate and align compliance practices.
Why This Matters:
- Standardizing cybersecurity across financial institutions reduces systemic risk
- Clear expectations for incident response help limit investor impact
- Mandated audit and reporting improve transparency
For intermediaries, robust cyber posture is no longer optional; it is a regulatory requirement, and falling short can expose entities to enforcement actions and reputational damage.
SEBI’s Guidance on Online Fraud, Impersonation and Miscommunication
While the CSCRF covers internal cybersecurity measures, SEBI has also issued public advisories and warnings directed at investors, focusing on scams that originate outside traditional regulated channels.
Fraudulent Social Media Activities
SEBI has repeatedly cautioned the public against fraudulent activities on social media platforms, including YouTube, WhatsApp, Telegram, Facebook, Instagram, and X (formerly Twitter).
Fraudsters use these platforms to:
- Disseminate misleading education sessions that eventually sell high-risk or fake investment schemes
- Promote unverified trading tips and guaranteed return claims
- Impersonate registered intermediaries to build false credibility and defraud customers
- Advertise fake trading apps or advisory services
SEBI urges investors to only engage with SEBI-registered intermediaries and verified trading applications. Unregistered entities are not eligible for investor protection or grievance redressal under SEBI’s mechanisms such as the SCORES portal. ETLegalWorld.com
Impersonation of SEBI and Intermediaries
Fraudsters have been known to impersonate:
- SEBI officials, using fake letterheads and forged certificates
- Registered intermediaries and brokers
- Official communication channels demanding payments
SEBI has issued specific cautions about fake SEBI communications that request compliance payments or penalty settlements via unofficial channels. Genuine SEBI notices are always posted on SEBI’s official website, and payments, if any, are processed through SEBI’s secure portals and gateways (e.g., designated SEBI payment portal). The Times of India+1
Tips from SEBI’s Advice to Investors
SEBI’s advisories consistently emphasize the following to prevent fraud and miscommunication:
- Verify registration: Anyone claiming to be a SEBI-registered advisor must provide a valid registration number, and investors should verify it on SEBI’s official website. Business Standard
- Use only official communication channels: Investors should interact with SEBI only through official emails (@sebi.gov.in), websites, or portals. The Times of India
- Recognize official call numbering: Registered intermediaries are instructed to use dedicated phone series (e.g., ‘1600’ series) to prevent fraudulent phone calls. 1-Comply
- Report fraudulent activities: Investors are expected to report suspicious communication via SEBI’s Market Intelligence Portal, enforcement portal, or cybercrime reporting tools. ETLegalWorld.com
- Engage only with trusted applications and platforms: Fake trading apps or unvalidated software can capture login credentials and facilitate identity theft or fund diversion. ETLegalWorld.com
These advisories aim to empower investors with awareness while also clarifying where regulatory boundaries lie.
Enforcement Actions and Investor Redressal Mechanisms
SEBI has established investor grievance mechanisms like SCORES (SEBI Complaints Redress System), which allow investors to log complaints against intermediaries or platforms. Investors can escalate fraud issues here, although redressal depends on whether the intermediary is registered and compliant. Investors engaging with unregistered entities may not receive relief under SEBI’s aegis. ETLegalWorld.com
Further, SEBI publishes enforcement actions and issues public alerts for unauthorized investment schemes. These enforcement disclosures reinforce registered intermediaries’ obligation to maintain compliance and internal controls and serve as warnings to the wider investing community.
Implications for Intermediaries and Market Participants
Compliance Is Central
For SEBI-regulated entities, compliance with investor protection obligations and cybersecurity requirements is mandatory.
This includes:
- Implementing robust cyber controls per CSCRF
- Maintaining clear, authenticated communication channels
- Monitoring online platforms for fraudulent impersonation
- Acting promptly on investor complaints and risk reports
Failing to address fraud vectors or miscommunication risks can result in regulatory action, financial penalties, and reputational damage.
Online Presence Monitoring
Given how fraudsters mirror legitimate brands and intermediaries online through fake websites, clone apps, social media channels, messaging groups, and contact numbers, the regulated entities must proactively monitor their digital footprint and online presence. This brand monitoring is essential to protect investors who may mistake fraudulent channels for official ones.
How AiPlex can be your Compliance Partner
At AiPlex ORM, we understand that regulatory compliance and brand integrity are intertwined.
In the context of SEBI’s investor protection and cybercrime directives, intermediary firms and financial brands face the dual challenge of:
- Ensuring compliance with SEBI cybersecurity and communication standards.
- Mitigating external fraud risks that exploit their brand, misleading investors.
Our Compliance Assurance Suite Includes:
Brand Monitoring and Protection
- Detection and removal of fake websites and domain clones
- Identification and takedown of fraudulent mobile apps and search listings
- Monitoring and deletion of messaging groups (WhatsApp, Telegram) using brand names
- Detection and deletion of false customer care numbers impersonating brands
These efforts directly counter the kinds of impersonation and fraud SEBI warns against.
Regulatory Compliance Support
- Mapping cybersecurity and communication obligations under SEBI circulars
- Assisting in risk assessment and mitigation planning aligned with CSCRF standards
- Monitoring digital channels for compliance breaches
Rapid Takedown and Enforcement
- Filing formal DMCA and legal takedown requests
- Engaging with platform enforcement teams to remove unauthorized content
- Liaising with authorities and intermediaries to manage fraud incidents
Real-Time Alerts and Intelligence
- Continuous surveillance of digital ecosystems for emerging threats
- Incident reports and dashboards tailored for compliance and legal teams
A Proactive Compliance and Protection Strategy
SEBI’s investor protection circulars and cybersecurity frameworks reflect the regulator’s focus on combating the multifaceted challenges of fraud, cybercrime, and impersonation in a digitized market. From public advisories to comprehensive cyber resilience requirements, these measures aim to preserve investor trust and market integrity.
For regulated entities and intermediaries, compliance is more than a checklist. It is a strategic necessity to mitigate reputational risk, protect investors, and uphold the credibility of India’s financial markets.
AiPlexORM stands ready to be your compliance partner, helping financial brands navigate regulatory expectations while proactively defending against brand abuse, online fraud, and digital impersonation.
Through robust monitoring, enforcement, and risk mitigation services, we ensure your brand remains protected, and investors stay confident.
For detailed service engagement and compliance solutions tailored to your business, connect with us at https://aiplexorm.com/contact-us
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TOP FAQs
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