The stock market regulator, the Securities Exchange Board of India (SEBI) has asked investors to exercise caution while investing in SME stocks. SEBI has advised investors not to rely on unverified social media posts and avoid investing on the basis of tips and rumors. SEBI said that it has issued this advisory keeping in mind the interests of investors.
SEBI issues new advisory for SME stocks
SEBI (Securities Exchange Board of India) said in an advisory issued on August 28, 2024, that it has come to its notice that after the listing of the company on the stock exchange of the SME segment, some SME companies or their promoters exaggerate the operations of the company. Such companies or their promoters have been found making public announcements that give a positive picture of the operations. After these announcements, corporate actions like Bonus Issues, Stock Splits, and Preferential Allotments are announced.
According to the Securities Exchange Board of Indi, these announcements create positive sentiments among investors, after which they buy these shares. Such things give the promoters an opportunity to offload their holdings at a higher price of the shares. SEBI said, that recently it has issued orders against such companies which are available on the website. SEBI said that the way these companies work is almost exactly the same as mentioned above.
According to the Securities Exchange Board of Indi, the SME platform of stock exchanges was started in the year 2012 so that emerging businesses can raise funds. Since then, there has been a huge jump in the number of SME issue launches, and the participation of investors has also increased in these SME issues. In the last decade, Rs 14,000 crore has been raised through these platforms, out of which Rs 6000 crore has been raised in the year 2023-24 itself.
