India’s market regulator on Thursday passed two interim orders against entities that used YouTube channels to manipulate stocks, barring them from the capital markets.
The Securities and Exchange Board of India (SEBI), in preliminary investigations, identified 46 entities that used the video streaming platform to pump and dump stocks.
These entities — a mix of traders and market analysts — used four YouTube channels to market stocks, according to the regulator.
SEBI’s interim orders came on the back of a year-long investigation following investor complaints that alleged YouTube channels were being used to influence them to buy particular stocks.
SEBI said these entities used misleading YouTube videos to create “false content” on select scrips, generating artificial interest. This was followed up with paid marketing campaigns for additional reach.
The increased interest in these scrips drove up the share price and made it possible for the entities to offload their entire holdings at inflated prices, SEBI said in its orders.
In one stock, the number of small shareholders increased from 2,167 to 55,343 in a short span of one quarter. In a second stock, the number of small shareholders increased from 517 to 20,009, SEBI found in its investigation.
In September last year, SEBI had sought to increase the surveillance of social media platforms through a Web intelligence tool to examine violations and analyse unstructured, publicly available data.
The market regulator had then invited an Expression of Interest (EOI) from bidders to implement, install and maintain a commercial-off-the-shelf (COTS) Web Intelligence Tool to monitor violations of securities laws by individuals, groups and other entities.
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