SEBI Warning on SME Stocks: The stock market regulator Securities Exchange Board of India (SEBI) has asked investors to exercise caution while investing in SME stocks. SEBI has advised investors not to trust unverified social media posts and avoid investing based on tips and rumors. SEBI said that it has issued this advisory keeping in mind the interests of investors.
In an advisory issued on August 28, 2024, SEBI (Securities Exchange Board of India) said, 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 which show a positive picture of the operations. These announcements are followed by the announcement of corporate actions such as Bonus Issues, Stock Splits, Preferential Allotments.
According to SEBI, 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, 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 SEBI, the SME platform of stock exchanges was launched 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.
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