"...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto"
If you recall, the above is the preamble of the Securities and Exchange Board of India Act, (SEBI) 1992 and what the objective of SEBI is all about. But I feel that SEBI is focusing on protecting the interests of Investors who are already invested. What makes me think so is the below instances which most of you might have encountered.
You might have seen the above 2 deceptive messages the one in a social media and another is through an SMS. In a Facebook ad, you can see a person who wants to help the humanity by assuring everyone 3000 profit per day by inviting you to his Whatsapp group. Everyone who drops in their number will be definitely exposed to N number of spam calls and SMS. And the second image shows you to buy certain stocks at a certain rate. I am sure that you wouldn't have known that such companies ever existed.
So what is the Primary objective of the people behind these messages?
The one who wants to create the Whatsapp group wants to create his own user base wherein he can recommend his favourite stocks or to be dumped stocks to the investors. The person posting such messages are usually part-time job seekers who are in search of online jobs thereby ending up with the job of spreading spam and encouraging Scam.
There are biggies behind it who want to dump their low performing penny stocks and also some Unregistered investment advisors who charge money for investment recommendation.
So once your number is shared you will receive an SMS as seen above. If you Invest in such shares you are quite sure to fall in trap. Because once you buy these shares you will seldom find a buyer to sell when required. Just test this scenario the next time you see such SMS by making a search of such scrips on the stock exchange website. You will find that there will be sell orders waiting to be executed without any buyers for it. And the buyers will be you if you get fooled by such SMS.
You might say I am wise enough to fall prey to such scams and this message is not relevant to me. But there are many victims of such scamsters and there is no one to protect them from these people. You will certainly be protected by such SMS to a certain extent if you have Do Not Disturb activated on your number but can't avoid seeing such message at some point in time.
Over the past few months, we have seen stock exchanges delisting several companies for non-compliance and various other reasons. This will definitely reduce people falling into buying Illiquid stocks. But SEBI as an investor protection body must educate people from not falling prey to these messages. There must be a caution message shown when investors go ahead to buy these kinds of shares. It is practically impossible for exchanges to highlight the shares which are recommended by spamsters. But at least they can highlight the fact of their liquidity or absence of it.
SEBI alone cannot regulate such online scams but there must be proper coordination among various departments like information technology department. And most importantly these scamsters must be brought to the books.
We see SEBI imposing heavy penalties on companies for certain offences but how often have we seen SEBI imposing penalty on Scamsters and spamsters?
The author can also be reached through avilraksalins@gmail.com and avilsalins.wordpress.com
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