The Securities and Exchange Board India (SEBI) has cracked down on a group of ‘analysts’ who had been offering speculative advice to investors to drive up the prices of certain scrips. The six individuals had been using social media to promote the shares of MetroGlobal Ltd, Total Transport Systems Ltd and Alkali Metals Ltd to create artificial demand.
The individuals used Telegram to run a Telegram channel called “bullrun2017”, where they posed as experienced research analysts in the process of receiving SEBI registration. However, the stock recommendations were being made by one of the six individuals, who didn’t have qualifications related to the securities market. The six were able to profit off the artificial demand generated to make unlawful gains of Rs 2.84 crore.
The market regulator has barred the six individuals from trading, ordering them to close any open positions within three months from the date of the order, and imposed a fine of Rs 2.84 crore.
The rise in popularity of retail investing in India and the continued bull rally in the equity market has led to a rapid rise in the number of individuals sharing unsolicited ‘stock recommendations’ to create artificial demand.
Self-proclaimed market gurus sharing doctored images of their portfolios/ trading positions on social media platforms to sell subscription services or technical analysis/derivative trading workshops to gullible investors is becoming a huge problem.
SEBI had brought this to the attention of the public through a notice in 2020.
“Such messages are sent to investors and the general public usually recommending to deal in specific stocks of listed companies, indicating target prices and giving fraudulent, misleading/false information relating to listed companies, inducing them to deal in these stocks. The circulation of such misleading messages is not only detrimental to the interest of investors but also adversely affects the integrity of the securities market,” the release had stated.
