SEBI Acts Against Social Media Stock Scams: ₹58 Crore Unlawful Gains Alleged

The Securities and Exchange Board of India (SEBI) has taken stringent action against seven individuals, barring them from the securities market for their alleged involvement in a scheme that generated wrongful gains amounting to approximately ₹58 crore. The regulator's investigation revealed that these entities leveraged social media platforms, including 'X' (formerly Twitter), to disseminate stock recommendations, primarily for small and mid-cap companies.

According to SEBI, the modus operandi involved a practice known as 'front-running'. The individuals would first accumulate shares of specific small and mid-cap stocks. Following their acquisition, they would then issue recommendations for these very stocks on various social media channels, thereby influencing their prices. Once the stock prices rose due to increased investor interest stimulated by their recommendations, the accused would offload their holdings, profiting from the artificial price movements.

This alleged manipulation highlights a significant risk within the unregulated space of social media-driven financial advice. Investors are often enticed by quick profit promises without understanding the underlying motives of those making the recommendations. SEBI's intervention underscores its commitment to safeguarding the integrity of the Indian stock market and protecting retail investors from such fraudulent schemes. The regulator continues to monitor online platforms closely to curb market manipulation and ensure fair trading practices.

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