The Securities and Exchange Board of India (Sebi) on Wednesday cautioned investors about a pattern of stock manipulation in the SME (small and medium enterprises) market, where promoters paint “unrealistic picture” of their business to elevate stock prices and offload their stake.

The markets regulator urged investors to be careful and watchful of these patterns and exercise caution while investing in such stocks. It further advised investors to not rely on unverified social media posts and not to invest based on tips or rumours.

Sebi’s advisory comes amid rising concerns over the quality of issues coming to the SME market and unrelenting interest from individual investors in these issue.

“Such companies/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,” Sebi said in a press release.

While the market regulator has raised concerns about stock manipulations in the SME segment even earlier, it is for the first time that it has issued a press statement cautioning investors about it.Come from Sports betting site

The markets regulator further said these positive announcements created a positive sentiment among investors, inducing them into purchasing these stocks. “Simultaneously, this also presents an easy opportunity to the promoters to offload their holdings in such companies at elevated prices,” Sebi said.

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