SME IPO price rigging, SEBI is investigating, said- regulator is collecting evidence for action

The prices of small and medium i.e. SME IPOs are being manipulated on a large scale. In such a situation, SEBI is considering making its rules more stringent. Besides, it is also collecting evidence to take action. SEBI Chairperson Madhabi Puri Buch said additional disclosure rules may come regarding SME IPOs.

SME IPO offers to exhibit a new pattern of price fluctuations, Buch stated at a Monday event. With these kinds of IPOs, it is crucial to take into account when trading and disclosures are made. Information about how to spot and address this kind of fraud has also been provided to the regulator.

The chairperson stated that the regulator is still collaborating with consultants to comprehend all the aspects and data analysis. The next action will be taken into consideration if errors are discovered. It is imperative, he said, that investors comprehend that SME matters are distinct from those of the main board. The context of the investor disclosure rules must be understood by SEBI.

The promoters of the companies, along with the operators, look for people who are willing to sell their applications for IPO and they are compensated for this under a special deal. The miscreants present applications in such a way that they are likely to get rejected, but this serves the purpose of increasing subscription numbers and attracting more retail investors, Buch said.

It would not be wise to let the bubble continue to form, Buch said, because when it bursts, it would hurt investors. that is not good. However, he did not give any specific time limit for action against such companies.