Surge in Retail Investors Engaging in Illegal Dabba Trading
Understanding Dabba Trading and Its Risks
Recently, there has been a notable increase in retail investors participating in illegal trading networks, particularly through a Telegram channel known as “Online Dabba Trading.” This form of trading, referred to as dabba trading, is both illegal and unregulated. In dabba trading, transactions in securities are conducted without being executed on any officially recognized stock exchange by SEBI. Instead, these trades are settled internally by the dabba operator, evading the oversight of stock exchanges and regulatory authorities. Since these transactions do not occur on official platforms, investors lose access to grievance redressal mechanisms provided by stock exchanges. Dabba trading lacks the security and guarantees associated with legitimate trades on stock exchanges, prompting SEBI to advise investors to avoid such practices.
Identifying Illicit Dabba Trading Channels
Identifying Illicit Dabba Trading Channels
The National Stock Exchange (NSE) has alerted investors about an unregistered group named 'Close Friends Traders', which is reportedly offering illegal dabba trading services via social media and a website. This group is active on platforms like YouTube, Instagram, and Telegram under various names, including “closefriendstraders” and “dabbatradingmcx.” They also run a website that claims to be “India’s No. 1 Trading Platform Tradedost.” The NSE has confirmed that Close Friends Traders is not registered with them in any capacity, whether as a broker or authorized representative. A police complaint has been lodged against this entity for breaching securities laws. Additionally, the NSE has identified other illegal entities such as 'Bear & Bull PLATFORM' and 'Easy Trade' that are also involved in dabba trading. There are specific operators under scrutiny by authorities, including the Tradeverse dabba trading network linked to an individual known as Raju Bhai Solanki, who operates through a website, mobile app, and direct contact. Another entity, Gurvinder Wealth, is active on WhatsApp and YouTube, providing stock tips and promises of guaranteed returns.
Legal Consequences of Dabba Trading
Legal Consequences of Dabba Trading
These offenses are cognizable, allowing police to investigate directly. Engaging in dabba trading may also lead to charges under the Bharatiya Nyaya Sanhita, 2023. Violations of the Securities Contracts (Regulation) Act, 1956 (SCRA) can result in severe penalties, including imprisonment for up to 10 years, fines reaching Rs 25 crore, or both.