sebi
Published on 16 July 2025
Need for Centralized Fee Payment to Combat Investment Fraud
SEBI Tightens Oversight with Centralized Fee Mechanism Amid Rising Clone Advisory Frauds
In a decisive regulatory move aimed at safeguarding retail investors from rising financial advisory scams, the Securities and Exchange Board of India (SEBI) has introduced the Centralized Fee Collection Mechanism (CeFCoM) — a platform designed to bring transparency, accountability, and traceability to how investors pay for advisory services.
This shift arrives at a time when unregistered and impersonated advisory outfits, like the recently exposed "Epic Traders," have exploited investor trust, collecting fees under the guise of SEBI registration before disappearing without a trace.
Clone Advisory Scams on the Rise: The “Epic Traders” Playbook
The "Epic Traders" case offers a telling example of how fraudsters are evolving:
- Impersonation Tactics: The entity posed as a SEBI-registered Research Analyst, complete with a slick website featuring stock photos, fabricated credentials, and even a web developer’s stolen profile photo.
- Payment Deception: Victims were directed to pay advisory fees into a YES Bank account opened under a proxy identity.
- Rapid Evaporation: Funds were quickly siphoned through multiple accounts. SEBI’s attempts to trace the perpetrators met with limited success.
This was not an isolated incident. Similar schemes have surfaced across Telegram channels, WhatsApp advisory groups, and social media platforms, often targeting first-time retail investors.
Enter CeFCoM: A Secure, Centralized Gateway for Advisory Fees
To combat this growing menace, CeFCoM — introduced by SEBI through a circular dated October 1, 2024 — is positioned as a centralized payment hub where investors can remit fees only to verified Investment Advisors (IAs) or Research Analysts (RAs) listed in SEBI’s official database.
How It Works:
| Component | Function |
|---|---|
| Central Payment Channel | All fees are routed through a SEBI-linked platform, removing ambiguity about the recipient. |
| Cross-Verification | The platform auto-validates the intermediary's registration before payment is accepted. |
| ASB Oversight | The Administration and Supervisory Body (ASB) will oversee onboarding, system audits, and client grievance redressal. |
| Pilot to Mandate | Optional at launch, CeFCoM is expected to become mandatory as adoption scales. |
Why CeFCoM Matters
In an environment where impersonators operate swiftly and beyond the reach of traditional enforcement mechanisms, CeFCoM introduces friction in all the right places — making it harder for fraudsters to pose as legitimate entities and collect funds undetected.
“The challenge with advisory frauds is speed — money moves fast, digital identities are hard to verify, and victims often come forward too late. CeFCoM forces a checkpoint before money leaves the investor’s hands,” said a former SEBI enforcement official.
What Investors Need to Know
SEBI has urged investors — especially first-time users of advisory services — to take the following steps:
Check Registration
Always verify the SEBI registration number of any IA or RA through SEBI’s official portal.
Avoid Direct Transfers
Do not transfer fees to personal UPI IDs, unverified bank accounts, or WhatsApp-promoted advisors.
Use CeFCoM When Available
Opt to pay advisory fees only through SEBI’s centralized portal, which confirms legitimacy in real time.
Report Suspicious Entities
Use SEBI’s SCORES platform to report suspected impersonation, fee frauds, or unregistered advisory operations.
SEBI’s Broader Crackdown on Unregistered Advice
CeFCoM isn’t being introduced in isolation — it’s part of a multi-pronged response to regulatory arbitrage and misuse of advisory channels:
- Action Against "Finfluencers": SEBI has stepped up scrutiny of financial influencers peddling tips without registration.
- Telegram & WhatsApp Tip Groups: These informal advisory rings are being mapped and investigated, particularly those offering guaranteed return schemes.
- Clone RA/IA Surveillance: Entities misusing SEBI’s registered numbers or using lookalike names are now being flagged for cyber and enforcement action.
What Comes Next: Mandatory Rollout on the Horizon?
While CeFCoM is currently optional, sources within SEBI suggest a phased mandate may be on the horizon.
“If advisory firms and investors embrace it voluntarily, we avoid enforcement. But if clone scams persist, we may require it as the only permissible route for fee collection,” noted a person familiar with SEBI’s implementation roadmap.
Investor education campaigns and industry workshops are also expected in the coming quarters to support CeFCoM onboarding.
Conclusion: Strengthening the Trust Fabric
The CeFCoM initiative reflects SEBI’s evolving philosophy: regulatory infrastructure must adapt to match the pace of digital malfeasance. As fraudsters become more sophisticated, enforcement must not only punish wrongdoing but also pre-empt it.
Centralized fee collection offers one such pre-emptive mechanism — placing a verifiable layer between investors and their advisors. While no system can eliminate fraud entirely, CeFCoM reduces the odds of deception and reinforces the architecture of trust that India’s growing retail investor base urgently needs.