SEBI Is Searching Social Media Portals, Messenger Channels To Find Culprits In Stock Market Scam
- SEBI conducted search and seizure operations at the residential premises of seven individuals and one company in various cities for circulating stock tips on social media to make profits.
On Thursday, the Securities and Exchange Board of India (SEBI) conducted search and seizure operations at the residential premises of seven individuals and one company in various cities for circulating stock tips on social media to make profits. The operations were undertaken in places like Ahmedabad and Bhavnagar in Gujarat, Neemuch in Madhya Pradesh, Delhi, and Mumbai, SEBI said in a statement.
The evidence found by SEBI
SEBI stated that it found various documents and records including laptops, mobile phones, desktops, tablets, hard drive disks and pen drives, which the individuals were using to give out stock recommendations. SEBI is going to conduct a detailed investigation about this issue.
Why is this a big issue?
The regulator stated that it identified nine Telegram channels with more than five million subscribers and the admins of the channels gave various stock tips to the subscribers. Such advice lured investors to trade in these scripts which resulted in an artificial increase in their volume and price. This allowed companies linked to these Telegram channels to sell their shares at a higher price and earn large profits at the expense of retail investors.
SEBI asks investors to be careful
The regulator also urged people to remain extremely careful and not base their investment decisions on investment tips they have received through social media and messaging platforms such as Telegram, WhatsApp, Instagram and Facebook.
SEBI started the investigation after it received information that such stock tips and recommendations with respect to specific companies are being widely spread through multiple social media platforms. “Perpetrators of such fraud use various marketing techniques to attract subscribers on their social media channels”, Sebi said.
Previously on 12th January, SEBI had clamped down on a similar stock recommendation scam on social media platforms, and imposed a fine of ?2.84 crore on six individuals and disallowed them from accessing the stock market. According to SEBI, these individuals were giving unsolicited stock recommendations using these social media channels to steer stock prices and make large profits illegally.
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