Stock market regulator Sebi is stepping up its action against cyber fraud and has asked state governments for support to prevent misuse of social media platforms and protect investors from growing online scams.
Sebi chairman Tuhin Kanta Pandey, who assumed charge in March, has written to chief secretaries of states urging them to collaborate in spreading awareness against cyber frauds that are causing heavy losses to investors. A proposal has also been made to form a working group that will include representatives from state governments, police and Sebi officials. Additionally, Sebi has offered to train state authorities to strengthen their ability to tackle cyber-related market frauds.
The regulator’s urgency comes amid a sharp rise in scams linked to the securities market through misuse of platforms such as YouTube, Facebook, Instagram, WhatsApp, X, Telegram, Google Play Store and Apple Store. Fraudsters are reportedly creating fake profiles and impersonating registered intermediaries to pose as market experts. They provide stock tips and investment advice under the guise of investor education.
“These entities, in association with other supporting entities, form WhatsApp and Telegram groups where they portray themselves as educational groups, thereby inviting innocent investors to join these groups,” Pandey said in his letter to the chief secretaries.
Sebi has intensified monitoring of misleading, manipulative and unlawful content on social media platforms and has engaged with these platforms to remove illegal content. It is closely watching manipulation in penny stocks and has rolled out new measures against unregistered investment advisers and research analysts who promise unusually high returns. The regulator has also begun taking action against financial influencers, or “finfluencers,” who mislead retail investors.
Stock exchanges have been instructed to crack down on unauthorised schemes and market practices, ensuring strict enforcement to safeguard the interests of investors.
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