SEC cracks down on WhatsApp traders
The Securities and Exchange Commission (SEC) is cracking down on social media sites and groups promoting stocks on WhatsApp mainly targeting investors trading on the Internet.
“This has been going on for some time and there are a large number of gullible investors being misled but now the new SEC Act has provisions to prosecute these types of tools,” a stockbroker said.
The regulator is monitoring WhatsApp accounts and warning certain investors who are operating these accounts, the Business Times learns. This has come on the back of the SEC filing action in the past month against big market offenders – the most prominent is Nimal Perera, formerly at the Vallibel Group of companies and now an independent investor for offences committed more than 10 years ago. He was found guilty on two occasions for market and price manipulation.
Early this year, stockbrokers attributed deceptive social media endorsements by certain high networth investors leading the Twitter and WhatsApp ‘game’. “There was misleading information on fundamentally strong stocks,” a stock broking company CEO said. They were informing retailers to sell out and make profits on certain shares, another stockbroker said alleging that these moneyed traders created fear anticipating buying lower on certain shares to make a quick profit.
Analysts said that certain high networth traders were seen pushing the prices down in dollar-earning counters.
“Some high networths had got latest shareholder lists of dollar income earning stocks and pointed at large shareholders of these companies selling their shares in these messages. This had turned sentiments of a large trader base who sold these shares,” an analyst said.
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