• Invest money in other people's trading account is legal

Sir 
Please told I have trading account, but I want to invest money in other people's trading account .

It is legal.or illegal ? l the other people is common man. He is not a advisor 
It is legal in sebi rules
So
Please send reply me 
If it is illegal, I will change my opinion and invest money in my trading account
Asked 7 years ago in Criminal Law
Religion: Hindu

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7 Answers

It is illegal, you can not do business in the name of other until and unless make them as partner.

Nadeem Qureshi
Advocate, New Delhi
6307 Answers
302 Consultations

1. Making investment for your personal gain you can invest in other person's account.

2. it becomes illegal when you invest in multiple person;s account or

3. You make investments for several person without taking permission of SEBI.

4.This one off investment is permissible.

Devajyoti Barman
Advocate, Kolkata
23198 Answers
510 Consultations

you can invest money in your trading account only

2)dont invest money in other trading account

3) avoid legal complications

Ajay Sethi
Advocate, Mumbai
96803 Answers
7810 Consultations

You can open trading Account if you are over 18 years and if you will operate this on an individual basis. It is open for resident Indian only.

2)Indian regulations require broker to maintain basic financial details about each client. You need to provide the broker the details of your bank Account. Your signatures on the Account opening form need to be the same, as maintained in the bank records. All Resident Individuals need to provide us Income Tax returns details - IT PAN/GIR number, during your Account opening process.

3) the transactions shall be subject to the provisions of the Securities and Contracts Regulations Act (SCRA), as amended, and to the rules and regulations of the Securities and Exchange Board of India (SEBI), National Securities Depository Limited (NSDL), the exchanges where broker will facilitate trading, and any applicable self-regulatory organization.

Ajay Sethi
Advocate, Mumbai
96803 Answers
7810 Consultations

Hi, Once you invest the money and thereafter if your friend refuse to return the amount then you are in trouble. So don't invest the money in your friend trading account.

Pradeep Bharathipura
Advocate, Bangalore
5611 Answers
338 Consultations

The risk involved in investing in other person's trading account is that you cannot legally claim anything from him and you may have to be at his mercy for return on your investment.

Moreover he has to answer income tax questions.

This can be considered as benami transactions also, which is prohibited in law.

if a person is found guilty of offence of benami transaction by the competent court, he shall be punishable with rigorous imprisonment for a term not less than one year but which may extend to 7 years and shall also be liable to fine which may extend to 25% of the fair market value of the property.

Better analyse all pros and cons and then jump into such adventures.

T Kalaiselvan
Advocate, Vellore
87004 Answers
2335 Consultations

There is a system called Alternative investment fund.

You can invest in such schemes.

Alternative Investment Fund or AIF means any fund established or

incorporated in India which is a privately pooled investment vehicle which

collects funds from sophisticated investors, whether Indian or foreign, for

investing it in accordance with a defined investment policy for the benefit of its

investors.

No scheme of an AIF (other than angel fund) shall have more than 1000

investors. (Please note that the provisions of the Companies Act, 1956 shall

apply to the AIF if it is formed as a company). In case of an angel fund, no

scheme shall have more than forty-nine angel investors.

However, an AIF cannot make invitation to the public at large to subscribe its

units and can raise funds from the sophisticated investors only through private

placement.

T Kalaiselvan
Advocate, Vellore
87004 Answers
2335 Consultations

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