The Securities and Exchange Commission of Pakistan (SECP) on Tuesday took much awaited action against fake investment gurus who were misleading naïve investors and using the pump and dump strategy.
The SECP has named Mir Mohammed Ali Khan as one of the perpetrators. Mir has a very large following on Facebook which he has amassed over the years. According to the SECP sources, he used this fan following to lure investors into buying certain scrips which he was simultaneously dumping. The accused was using accounts of his family members to carry out the activity.
One of Mir’s recent Facebook posts relates to the French election where after talking about Emmanuel Macron, he somehow connected the post to Pakistan’s stock market and how one particular sector and three stocks are set to benefit.
His actions should not come as a surprise to many as charges of similar nature were filed against him in America and have been covered by newspapers like the New York Times.
Right after the news came out on the media, Mir took to social media and denied all allegation and termed them as ‘absolute lies’.
The action from the SECP has triggered a reaction across social media websites especially on Facebook where most of these gurus had created their investment tips groups. Some changed their groups’ privacy settings, some changed the name and some even went to delete the entire group.
While the initiative from the SECP is appreciated but is it two years too late? Everyone in the market knew about these groups and the modus operandi of these fake gurus. Most of the groups online were open to the public and anyone could have had access to the posts and comments on these groups
Going forward, the SECP needs to be proactive rather than reactive on issues of investor protection. While online gurus are being taken to task, there should also be a check on brokerage houses who issue buy/sell call recommendations with ulterior motives.
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