Indian Regulators Pursue Market Manipulators Around Web

January 11, 2018

Apparently, efforts by India’s market watchdog have driven manipulators in that country to explore alternative methods of communication. So we learn from the article, “Market Manipulators Take To Dark Web, Whatsapp As Sebi Steps Up Surveillance” at India’s NDTV. Note that a “multi-bagger” is a deal promising multi-fold returns. We’re told:

Market manipulators have hooked onto dark web and private chat groups on messaging apps like WhatsApp and Telegram for sharing ‘multibagger’ stock tips and unpublished price sensitive information about listed firms. This has prompted the exchanges and the regulator to beef up the ‘whistleblower’ framework to encourage people, including investors and those working with various market intermediaries, to anonymously give a tip-off on such groups. The shift to these platforms follow an enhanced vigil by the capital markets watchdog Sebi (Securities and Exchange Board of India) and the stock exchanges on social media platforms like Facebook and Twitter, while the regulator can also seek call data records from telecom firms for its probe.

The article notes that both the National Stock Exchange of India and the Bombay Stock Exchange have tip-off systems in place and that officials are considering ways to reward whistleblowers. Both exchanges are using social media analytics to monitor for rumors and news reports about companies they have listed. They are also analyzing the last year’s worth of trade data for such companies, hoping to spot any breaches of norms. So far, Sebi has taken action against some parties for providing investment advice without a registration. The article observes that last year, Sebi suggested banning the exchange of “unauthorized trading tips” through chat apps, social media, and securities-related games and competitions; however, no such regulation has been put in place as of yet.

Cynthia Murrell, January 11, 2018

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