Sebi cautions investors against SME firms doing price manipulation

Chandigarh/New Delhi, Aug 28

With certain companies resorting to share price manipulation by projecting an unrealistic picture of their operations, the Securities and Exchange Board of India (SEBI) on Wednesday urged the investor to be careful and exercise caution while investing in such securities.

In a statement, Sebi said it has come to the notice of SEBI that, post listing, some of the SME companies or their promoters have been resorting to certain means that project an unrealistic picture of their operations.

Such companies or 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, preferential allotments, etc, it said.

According to the Sebi, the actions create a positive sentiment amongst investors, which induces them into purchasing such securities. Simultaneously, this also presents an easy opportunity to the promoters to off load their holdings in such companies at elevated prices.

“SEBI urges investors to be careful and watchful of the aforesaid patterns and exercise caution while investing in such securities. Further, investors are advised to not rely on unverified social media posts and not to invest based on tips or rumours,” the statement said.

Sebi, in the recent past, has passed orders against such entities, which are available on the SEBI website.