Those offering tips on social media are in for trouble; SEBI will use AI to uncover their schemes..

Everyone wants to make quick profits by investing in the stock market. Taking advantage of this greed, many individuals on social media pose as "market experts." If you are investing in the stock market based on the advice of such people, you need to be extremely cautious. Tuhin Kanta Pandey, a senior official (associated with market regulator SEBI), has issued a clear warning to retail investors during a press conference. He identified unregistered social media influencers as a major threat to the hard-earned money of investors.

**A Fraudulent Scheme Disguised as "Membership"**

During the press conference, it was revealed how ordinary people are being ensnared via social media. Many social media influencers—who lack any registration with SEBI—target the public, enticing them to join their private groups or exclusive "membership" programs. They charge significant sums of money for these memberships. Most alarmingly, the money collected from investors is never actually invested in the stock market. In other words, the funds entrusted by investors—based on the "tips" or investment advice provided—never reach the market, leaving the investors as victims of fraud.

**The Significant Danger of "Penny Stocks"**

Beyond just fake experts on social media, the warning also extends to low-priced shares, commonly known as "penny stocks." Retail investors are often drawn to these inexpensive stocks; however, it has been explicitly stated that penny stocks pose a major risk. A primary reason for this is that many such companies listed on the stock exchange have been completely inactive for years. Even though their business operations have long since ceased, their shares continue to be traded on the market. Investing in such stocks can easily lead to financial losses for investors.

Regulatory Process to be Expedited
To protect investors from the shares of defunct (non-operational) companies, preparations are underway to tighten regulations. The SEBI Chairman has acknowledged the need for a more stringent regulatory framework in this regard. Furthermore, the enforcement process must be accelerated to take timely action against companies that have remained listed for years despite having no business operations. SEBI is now significantly fast-tracking this entire process.

SEBI to Tighten Oversight Using AI
To curb the rapid spread of fraudulent activities on social media, SEBI has decided to leverage modern technology. Chairman Tuhin Kanta Pandey stated that SEBI is introducing stricter regulations to monitor social media platforms. Artificial Intelligence (AI) is being employed to expedite this task. Through AI, SEBI will be able to easily track unregistered influencers who solicit money from the public—often under the guise of 'membership' fees—without proper authorization. This move by SEBI is set to effectively shut down the operations of those providing fraudulent financial advice.

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