SEBI Warns against Price Manipulation in SME Stocks
Moneylife Digital Team 29 August 2024
Amid certain small and medium enterprises (SME) companies and their promoters resorting to share price manipulation by projecting an unrealistic picture of their operations, market regulator Securities and Exchange Board of India (SEBI) has cautioned investors against putting their money in the scrips of such companies. The SME platform of the stock exchanges was launched in 2012 and, during the past decade, more than Rs14,000 crore has been raised through the platform, including Rs6,000 crore in FY23-24. 
 
In a statement, SEBI says, "It noticed that post-listing, some of the SME companies and / or their promoters have been resorting to certain means that project an unrealistic picture of their operations. Such companies and promoters have been seen to make public announcements that create a positive picture of their operations. These announcements are typically followed up with various corporate actions such as bonus issues, stock splits and preferential allotments."
 
"The above actions create a positive sentiment amongst investors, which induces them into purchasing such securities. Simultaneously, this also presents an easy opportunity for promoters to off-load their holdings in such companies at elevated prices," it added.
 
In the recent past SEBI passed several orders against such entities. "It can be seen that the modus-operandi of these entities follows a pattern that is by and large similar to what has been mentioned above." 
 
Urging investors to be careful and watchful of these patterns and exercise caution while investing in such securities, SEBI says investors are advised not to rely on unverified social media posts and not to invest based on tips and rumours.  
Comments
Saket Jain
2 weeks ago
I need help understanding whether SEBI is a regulator or a News Agency. If they know this manipulation, why are they not curbing it?
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