SEBI Signals Stricter Disclosure Norms For SMEs Amid Manipulation Concerns

New Delhi, Mar 13 (KNN) Madhabi Puri Buch, Chairperson, Securities and Exchange Board of India (SEBI), announced that SEBI is intensifying efforts to enforce more stringent disclosure standards for Small and Medium Enterprises (SMEs) entering the market.

This initiative aims to address issues of manipulation observed at both the Initial Public Offering (IPO) stage and during price fluctuations, reported TH.

Buch emphasised the vulnerability of SMEs due to their smaller issue sizes and free floats, making them susceptible to manipulation at both the IPO and trading levels.

She stated, “It is relatively easy to manipulate both at the IPO level and at the trading level. I think as a first step we are clear that some more disclosures are needed in terms of the risk factors.”

Feedback received by SEBI indicated that some SMEs were taking advantage of the relatively lenient oversight, prompting the implementation of surveillance measures applicable to the SME board.

SEBI possesses the technological capability to monitor price movements and subscription data, identifying evidence of manipulation and discerning certain patterns.

However, Buch noted that constructing a comprehensive case and initiating action would require time. Malpractices have been observed not only during IPO subscriptions but also at the listing stage.

Buch expressed gratitude for the market's feedback, which has guided SEBI in identifying and addressing such cases effectively.

She mentioned, “Fortunately, the market has given us feedback and advised us on, what we can do in order to identify such cases and to deal with them.”

Collaboration with industry stakeholders is crucial to mitigating risks inherent in this sector.

Despite numerous SME IPOs being oversubscribed significantly in recent years, with listing gains far surpassing their issue prices, Buch refrained from providing a timeline for the implementation of disclosures, citing the early stages of the process.

Any necessary actions will be taken against culpable parties based on the findings of ongoing investigations.

SEBI continues to collaborate with advisors to comprehend the dimensions and analyse the data, ensuring effective measures are implemented to safeguard market integrity and investor interests.

(KNN Bureau)