SEC aggressively warning social media pundits
The Securities and Exchange Commission over the past two weeks has warned more than 10 Facebook account holders for displaying the Colombo Stock Exchange logo on Facebook pages and promoting stocks.
Most warned were 18 to 35-year-old individuals, an official told the Business Times on Thursday. An 18-year-old, who was giving investment advice on Twitter, despite being warned, was banned for the next five years from joining the industry by the regulator, just last month.
The entire landscape of the capital market changed afterwards, and now 95 per cent of accounts opened are through the CSE mobile App.
There are over 25,000 new traders in the market doing more than 60,000 daily trades. Not all of them trade on fundamentals, value or sound judgement. “Some of them trade on sentiment,” an investor said. The basis for most of these trades was not based on companies’ fundamentals but unrealistic assumptions. Once the shares were brought, they promoted them through Facebook and Twitter accounts and dumped them with good gains, an official said.
Early this year, stockbrokers attributed deceptive social media endorsements by certain high networth investors leading the Twitter, and WhatsApp ‘game’.
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